AOV (Average Order Value)
Also known as: Average Order Value, average basket
The average revenue per order across a defined period.
AOV is one of the three levers that decide whether paid advertising is profitable — traffic volume, CVR, and AOV. Because AOV can be moved without spending more on media, it's the fastest lever for improving ROAS and CAC payback in established stores.
Definition
AOV is total revenue divided by the number of orders in a period. It answers 'how much does a buyer spend when they buy?' and moves independently from conversion rate.
Why it matters
A 20% AOV lift has the same P&L impact as a 20% CVR lift — but it costs nothing in ad spend, because you're monetising traffic you already paid for.
Formula
AOV = Total Revenue ÷ Total Orders
- Revenue
- Gross merchandise value net of refunds/discounts.
- Orders
- Unique completed transactions in the window.
What drives AOV
Three levers dominate: (1) product-set composition — the mix of hero SKUs vs. long-tail you promote in DPAs and catalog ads; (2) merchandising on the landing page — bundles, cross-sells, and quantity discounts; (3) free-shipping thresholds set slightly above the current median cart. Ads themselves influence AOV through what they feature: a hero video for a $30 SKU trains buyers to a $30 order; a category-story ad trains them to browse.
How to lift AOV without hurting CVR
Move the free-shipping threshold up in $10 increments and watch AOV, orders, and refunds in parallel. Add a cross-sell block on the product page for complementary SKUs, not identical alternatives. Use Meta and TikTok collection ads that surface 3–4 products so the click intent is 'browse the set' rather than 'buy the hero.' On Google Shopping, rebuild product sets around basket-affinity, not category.
AOV in unit economics
Break-even AOV = CPA ÷ contribution margin %. If your CPA is $28 and your contribution margin is 45%, you need an AOV of at least $62 to break even before repeat purchase. Use LTV to justify going lower on the first order.
$42,000 revenue across 600 orders = $70 AOV.
Common mistakes
- ✕Reporting AOV without excluding refunds.
- ✕Ignoring channel-level AOV differences (paid social vs email).
- ✕Cutting discounts without checking the AOV impact.
- ✕Optimising ROAS while AOV silently drops.