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Average order value (AOV) is the average amount of money a customer spends every time they place an order in your store. So if your AOV is $37 and you have 80 orders in one week, you can expect to sell roughly $2,960 of product across those 80 orders.
It’s worth tracking AOV for your store regularly, especially if you’ve been in business for a year or more. In the early stages of an ecommerce business, when you’re still building a customer base and figuring out what to sell, your AOV will likely be lower and vary more month to month.
Why is average order value important?
AOV typically reflects how many items your customers are adding to their cart every time they shop on your website. The higher your average order value, the more your customers are buying when they visit.
How many things someone buys on each website visit can also reflect how well you’re marketing your entire set of products. The idea is that if you’re keeping people on your website for longer and effectively pitching the other things you sell, then they’ll naturally add more things to their cart. A higher AOV means you’re selling more products—and ideally earning a higher profit as a result.
How to calculate AOV
To calculate your average order value, divide the total revenue from a set period by the number of orders you received during that period. The revenue number typically includes the price of your products plus shipping, but not taxes. That’s your AOV.
So if you sold $5,200 of product in June (not subtracting your operating and materials costs) and received 236 orders, your AOV for June would be 5200/236 = $22.03.
AOV measures by the number of orders instead of by individual customers, so even if the same customer made two orders in June, each order would factor into your average order value separately.
Factors that impact your AOV
The key factor in your average order value is how you price your products. If you offer more lower-priced products, you may have a lower AOV. Meanwhile, if you have items for sale at a wide range of prices, your AOV can give you an idea of whether you’re selling more lower-priced items or more higher-priced items.
Of course, if you’re running a discount promotion, you can expect to have a lower AOV. Likewise, if customers typically buy just one thing when they visit your store, you’ll have an AOV that’s closer to the price of your most popular product.
Ways to increase AOV
The first step to increasing your average order value is to understand what’s contributing to your current AOV. Look at the pricing of your products, recent promotions you’ve run, and how many things most customers add to their cart in every order.
Depending on what’s contributing to your AOV, here are a few ways to increase that number.
Add higher-priced products to your store or change your pricing strategy.
Figure out what’s driving sales for your most popular products and apply that elsewhere.
Offer other rewards for shopping, like free gifts or customer loyalty rewards.
Put more marketing behind your higher-priced products to generate more sales.
Sell bundled products.
Set a minimum order amount to get free shipping.
Upsell or cross-sell additional items by showing customers related products on product pages.
Upsell or cross-sell by sending customers emails to share product recommendations.
Read our tips for increasing conversion rates in your store
How to measure and track your AOV
You can use the tools built into your ecommerce platform to measure and track your AOV over time. Squarespace’s sales analytics tools automatically calculate your AOV, so you can easily track changes to the number in your website dashboard.
If your platform doesn’t do the math for you, you should be able to find your total orders and your total revenue for a certain period in your analytics. Then, you can do the math using the formula above.
How often to measure your AOV
How often you track your AOV is up to you and what makes sense for your store. See how often your AOV changes daily or weekly. If there are large changes in those periods, it might make sense to check in more often.
Looking at longer periods can give you more context. For example, you might see that you have a higher average order value during the holiday season than in the summer months.
Likewise, it makes sense to check in on your metrics after you make any changes to your marketing. For example, you might want to see the impact on your AOV in the days and weeks after you send an upsell email or after you post about a new product on social media.
Other ecommerce metrics to track
AOV is just one of many key performance indicators (KPIs) that can help you grow your online store. Of course, you’ll want to track the total orders you get and your revenue and profits over set periods.
To get the most useful information out of your sales data, consider tracking these other metrics too.
Conversion rate: This reflects what percentage of visitors to your website convert into paying customers.
Customer acquisition cost (CAC): This breaks down how much you spend on ads or other paid marketing per paying customer that you get out of that spending.
Number of new and repeat customers: New customer and repeat customer numbers both reflect the health of your business. Bringing in new business and retention of existing shoppers is how you grow.
Number of units sold per item: Tracking this number will help you see which products or types of products are most popular, so you can plan inventory, sourcing, and marketing.
Revenue per visit (RPV): RPV measures how much money you make on average every time someone visits your store. Unlike AOV, RPV includes visits where someone doesn’t spend any money.
Revenue, profit, and sales by product: Like units sold per item, this information can help you decide where to focus your budget, time, or marketing.
Sales per traffic source: When you know where most of your buying customers are finding you, you can either invest more in that channel or find ways to improve conversion from other traffic sources.
Shopping cart abandonment rate: This reflects how many customers are leaving your site before finishing the checkout process. High abandonment rates could mean your shipping costs or other fees are too high.
You don’t have to track every one of these things to stay on top of your ecommerce business. Decide what your goals are for your business over a set period, like three, six, or 12 months. Then choose a few KPIs to focus on that can tell you how you’re tracking against those benchmarks and adjust as needed.