What is average order value?
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Average Order Value (AVO)

What is average order value?

Average order value (AOV) is the average dollar amount customers spend during each transaction on a website or in an app. It is a crucial ecommerce metric that helps businesses understand customer behavior, pricing strategies, and overall revenue generation. 

How does average order value work?

Average order value provides a benchmark to track progress toward sales goals. Marketers can use average order value to assess the effectiveness of their pricing strategy, product offerings, and marketing efforts in influencing customer spending habits.

A higher AOV generally indicates a more efficient business model. It suggests you're either selling higher-priced items, encouraging customers to buy more per order (through upselling or promotions), or attracting a customer base willing to spend more.

How do you measure average order value?

To measure AOV, you divide the total revenue by the number of orders placed. For example, if total revenue was $4,000 and there were 160 orders, the AOV would be $25.

AOV can be measured based on different timeframes such as monthly AOV, weekly AOV, or daily AOV. Companies typically track the moving monthly average AOV.

Why is average order value important to marketers?

AOV helps evaluate marketing efforts and pricing strategy. It can also help identify customer segments with higher spending potential or areas for improvement (e.g., encouraging larger basket sizes). Increasing AOV is an effective way to drive revenue without incurring additional costs.

Who needs to know what average order value is:

  • Digital marketer manager
  • Ecommerce manager
  • Advertising manager
  • Data analyst
  • Sales manager
  • Account executives
  • Business development manager

Use average order value in a sentence:

“The company's average order value increased by 15% last quarter, indicating its marketing and pricing strategies are effectively driving higher customer spending.”