Definition: Average Order Value

What is average order value?

Average order value (AOV) is the average amount spent per transaction for a company's customer orders within a certain period of time. This key figure provides information on whether customers buy more or less high-priced items on average with each order over time.

Factors such as targeted promotions, seasonal trends or changes in product selection can influence the AOV upwards or downwards. For example, the introduction of a new range of premium products can lead to higher average customer budgets per order, while ongoing discounts or one-off purchases can lower the average cost. Tracking the development of AOV over time will give you useful information about customer buying behaviour and help you determine whether current tactics are successful and leading to larger shopping baskets.

How is the average order value calculated?

To calculate AOV, companies take the total revenue from all orders and divide it by the total number of orders within a given time period — usually monthly, quarterly or annually.

The formula for calculating AOV is:

Total revenue / Number of orders = Average order value

For example, let's consider an online clothing retailer during the month of January, where the total revenue from orders was $50,000 and the total number of orders was 500. As such, the AOV for the month of January will be:

$50,000 / 500 = $100

This means on average, each order during January was worth $100 in total sales.