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AOV (Average Order Value) is the average amount a customer spends on an order. The business calculates it by dividing the total revenue by the number of orders.
What is Average Order Value?
The average order value shows how much of a portion of sales an e-commerce business earns per order. It makes it easy for you to see if customers are making small purchases or adding more products to their carts.
For example, if your store earns $20,000 from 500 orders, your AOV is $40. AOV can help answer questions, such as:
- Are customers spending more or less over time?
- Which products lead to larger orders?
- Which marketing channel brings higher value orders?
- Are discounts reducing average order value?
- Can bundles or upsells increase order size?
AOV is usually measured alongside metrics such as conversion rate, customer acquisition cost (CAC) and customer lifetime value (LTV).
Average Order Value Formula
The AOV formula is total revenue divided by the total number of orders.
AOV = Total Revenue ÷ Number of Orders
For example:
$50,000 ÷ 1,000 orders = $50 AOV
Make sure that you are using the same period for both revenue and orders. You can calculate AOV by day, month, quarter, revenue channel, product category, or buyer segment.
Why is AOV Important?
AOV matters because increasing the amount customers spend per order can increase revenue without requiring the same increase in buyer volume. It also helps businesses evaluate pricing, promotions, bundles and upselling techniques.
For example, if you have 1000 orders:
- $40 AOV = $40,000 revenue
- $50 AOV = $50,000 revenue
- $60 AOV = $60,000 revenue
This makes AOV useful for planning and performance analysis. AOV also becomes more valuable when you break it down by revenue per channel.
A paid social campaign may generate many orders but a lower AOV, while email or organic search may bring fewer orders with higher average spending.
A sales dashboard for eCommerce can make these differences easier to track in one place.
SMB/DTC Benchmark
There is no single good AOV for every SMB or DTC brand. AOV varies widely by product price, industry, business model, customer type and sales channel, so your own historical performance is usually the most useful benchmark.
Instead of asking whether your AOV matches another store, compare:
- AOV month over month
- AOV by product category
- AOV by new vs. returning customers
- AOV by marketing channel
- AOV before and after promotions
- AOV against your gross margin
For DTC brands, a rising AOV can be a positive sign, but it should not come at the cost of lower conversion rates or weaker margins.
How Can Sales Analytics Help Improve AOV?
Want to turn AOV into a more useful view of eCommerce performance? Use sales analytics to compare AOV with revenue, orders, products and revenue per channel in one view. DataAnalyticsStack is a managed sales analytics partner, not a dashboard tool you have to build yourself, and not a one off consulting project.
