What is Average Order Value?

Average Order Value (AOV) is the average amount a customer spends per completed order during a specific period.

The basic formula is:

The Formula for AOV (Average Order Value)

AOV = Total Revenue ÷ Total Orders

For example, suppose your Shopify store generates:

$20,000 in revenue

400 orders

Your AOV would be:

$20,000 ÷ 400 = $50

So, on average, customers spend $50 per order.

AOV can be calculated for a day, week, month, quarter, or any other period. The important thing is to use revenue and order data from the same period.

GoProfit uses a similar calculation in its analytics dashboard:

AOV = Gross Sales ÷ Total Orders.

Why does average order value matter?

AOV gives you a quick view of how much revenue you’re generating from each transaction.

Imagine two stores that both receive 1,000 orders.

	Store A	Store B
Orders	1,000	1,000
AOV	$30	$50
Revenue	$30,000	$50,000

Both stores have exactly the same number of orders.

But Store B generates $20,000 more revenue because customers spend more per transaction.

This is why increasing AOV can be an effective growth lever.

Instead of relying entirely on acquiring more customers, you can look for opportunities to increase the value of each existing order.

However, this doesn’t mean you should simply try to make customers spend as much as possible.

The goal is to increase AOV without damaging Conversion Rate, customer satisfaction, or profitability.

AOV vs. Revenue: What’s the Difference?

These two metrics are related, but they answer different questions.

Revenue tells you:

How much did we generate from sales?

AOV tells you:

How much did customers spend per order on average?

For example:

Store A

$50,000 revenue
1,000 orders
AOV = $50

Store B

$50,000 revenue
500 orders
AOV = $100

Both stores generate the same revenue.

But their customer purchasing behavior is very different.

Store B generates twice as much revenue per order.

This could mean Store B has a different product mix, stronger upselling, higher prices, larger baskets, or a different customer segment.

AOV and Conversion Rate Work Together

AOV shouldn’t be viewed separately from Conversion Rate.

Conversion Rate tells you how effectively your store turns visitors into customers.

AOV tells you how much those customers spend.

Consider two stores:

Metric	Store A	Store B
Traffic	10,000	10,000
Conversion Rate	3%	2%
Orders	300	200
AOV	$40	$80
Revenue	$12,000	$16,000

Store A has the higher Conversion Rate.

But Store B generates more revenue because its AOV is twice as high.

This is why ecommerce growth isn’t simply about maximizing one metric.

You need to understand how traffic, conversion, order value, and profitability interact.

If you’re working on Conversion Rate as well, see our related guide: Conversion Rate: A Simplified Overview.

AOV and Customer Lifetime Value

AOV tells you how much a customer spends per order.

Customer Lifetime Value (CLV) considers how valuable that customer can become across their relationship with your business.

For example, a customer might initially place a $40 order.

If they return five more times and spend $40 each time, their total purchases could eventually reach:

$40 × 6 = $240

That makes the original customer acquisition cost look very different.

This is particularly important for businesses selling consumables, subscriptions, replenishment products, or products with strong repeat-purchase behavior.

For more on this topic, read Customer Lifetime Value: A Simplified Overview.

You Shouldn’t Focus Only on the Average

The word “average” can sometimes hide what’s really happening.

Imagine a store has 100 orders.

Most customers spend around $30.

But two customers place $500 orders.

Those two large purchases can significantly increase the average.

Your AOV might therefore look like $40 even though most customers actually spend closer to $30.

This is why it can be useful to look beyond the mean and examine the median and most common order values as well.

Shopify’s current AOV guidance specifically highlights the value of considering mean, median, and mode because a small number of high-value orders can distort the average.

For example:

Mean: $40
Median: $31
Most common order: $30

This tells a very different story from simply saying:

“Our AOV is $40.”

If most customers are spending $30, a free-shipping threshold of $60 may be unrealistic.

A threshold closer to the typical order size could create a more achievable incentive for customers to add another item.

Ways AOV Impacts Business Decisions

Increasing Average Order Value (AOV) not only boosts revenue but also improves business efficiency. It enhances customer insights, boosts conversion rates, frees up advertising budget, and optimizes pricing strategy, making AOV a key business metric.

Customer Trends

AOV reveals which campaigns resonate with top customers. Analyze AOV fluctuations to refine future campaigns and pricing, ensuring alignment with customer behavior.

Conversion Costs

A low AOV with high acquisition costs leads to losses. To stay profitable, AOV should be at least twice your customer acquisition cost.

Advertising Spend

AOV influences marketing effectiveness. Ensure advertising costs don’t exceed AOV, and assess profit margins by considering all related expenses.

Pricing Strategy

Adjusting pricing impacts AOV. Higher AOV with stable or increased ROI suggests effective pricing while aligning with brand perception helps sustain profitability.

How to Increase Average Order Value

Offer free shipping thresholds

Free shipping can encourage customers to increase their order value.

For example, imagine a customer has $42 worth of products in their cart.

Your store offers:

Free shipping on orders over $50

The customer may decide to add another $10 product rather than pay a shipping fee.

Their order increases from $42 to $52.

The key is setting a threshold that feels achievable.

Shopify recommends considering your typical or most common order values when setting a threshold. Its current guidance also notes that setting the threshold too high can create friction rather than encourage additional spending.

And remember to calculate the economics.

If giving away $8 of shipping costs you more than the additional margin generated by the extra purchase, the strategy may not be profitable.

Try cross-selling

Cross-selling means recommending complementary products.

For example:

Laptop → Mouse

Camera → Memory Card

Running Shoes → Running Socks

Skincare → Moisturizer

The best cross-sells feel relevant rather than random.

If a customer is buying a product, ask:

“What else would make this purchase more useful?”

A complementary $15 product can sometimes be easier to add to a $60 order than convincing the customer to buy another $60 product.

Create Product Bundles

Bundles combine multiple products into a single offer.

For example:

Product A: $30
Product B: $25
Product C: $20

Purchased separately: $75

Bundle: $65

The customer gets a perceived discount while the store increases the amount purchased per transaction.

Bundles can work particularly well when products naturally belong together.

However, don’t assume a bundle is automatically profitable.

Calculate the margin after discounts, fulfillment, shipping, and other costs.

Use Upselling Carefully

Upselling encourages customers to purchase a higher-value version of the product they’re already considering.

For example:

Basic → Premium
500ml → 1L
Standard → Pro
Single Pack → Family Pack

The upgrade should provide a clear reason to spend more.

If the customer can’t understand the additional value, the upsell can simply create friction.

A good upsell answers:

“Why is the more expensive option worth it?”

Offer Volume Discounts

Volume discounts encourage customers to purchase more units.

For example:

1 item – $20
2 items – $36
3 items – $48

This can work particularly well for products customers naturally buy in multiples.

However, make sure the discount doesn’t erase your margin.

The goal is not:

More units = more revenue

The goal is:

More units = more profitable revenue.

Build Loyalty and Repeat Purchasing

Increasing AOV isn’t only about getting customers to spend more today.

Loyalty programs and retention strategies can encourage customers to return and purchase again.

For example, you might offer:

Points
Member discounts
Free gifts
Early access
VIP tiers
Rewards for larger purchases

However, loyalty programs should be designed around your actual customer behavior and margins.

Giving away excessive discounts just to increase order value can reduce profitability.

The Most Important Point: Higher AOV Doesn’t Always Mean Higher Profit

This is where many ecommerce businesses get AOV wrong.

Imagine your AOV increases from:

$50 → $70

It looks great.

But suppose the increase came from offering a 30% discount on larger orders.

Revenue increased.

AOV increased.

But your margin may have fallen.

Another example:

You offer free shipping for orders over $100.

Customers start spending more.

Your AOV increases.

But if shipping costs increase significantly, your profit may not improve by as much as expected.

This is why AOV should be connected to your cost structure.

A useful way to think about ecommerce performance is:

Revenue → Costs → Profit

AOV helps explain the revenue side.

But GoProfit helps you see what remains after the costs associated with running the business.