Average order value (AOV) calculator
Calculate the average order value (AOV) of your e-commerce business. Ideally, your AOV should be higher than the cost of acquiring your customers (CAC). Generally, the AOV in e-commerce is between $30 – $150.
Quick intro to AOV
Average Order Value (AOV) is a key metric for e-commerce stores that measures the average amount a customer spends each time they place an order. Understanding your AOV helps you gauge the effectiveness of your pricing, marketing, and merchandising strategies.
Improving your AOV is often more cost-effective than attracting new buyers. Strategies like bundling products, offering volume discounts, cross-selling, and setting free shipping thresholds can encourage customers to spend more per transaction.
Ideal AOV
There isn’t a single “ideal” AOV in e-commerce. It depends on your product type, pricing, and business model.
However, a healthy AOV should be higher than your Customer Acquisition Cost (CAC).
Best way to optimize it
To optimize your AOV, focus on strategies like product bundling, cross-selling, and upselling to encourage customers to add more items to their carts. Offer incentives such as free shipping thresholds, volume discounts, or gifts with purchase to motivate larger orders.
How to calculate average order value (AOV)?
Average Order Value (AOV) is calculated by dividing your total revenue by the number of orders over a specific period. This metric tells you the average amount each customer spends per transaction.
Formula: AOV = Total Revenue ÷ Number of Orders
Average order value (AOV) FAQs
AOV measures the average amount a customer spends each time they place an order on your website. It’s important because it provides insight into customer buying behavior, helps evaluate the effectiveness of marketing strategies, and identifies opportunities to grow revenue without having to acquire new customers.
AOV is calculated by dividing your total revenue by the number of orders within a specific period. For example, if your store earns $10,000 from 200 orders in a month, your AOV would be $10,000 ÷ 200 = $50.
You can boost AOV by offering product bundles or sets at a discount, using upselling and cross-selling techniques, setting free shipping thresholds, providing volume discounts, and running limited-time promotions to encourage customers to spend more per transaction.
You can increase your CLV by:
- Using personalized email marketing
- Offering loyalty and rewards programs
- Upselling and cross-selling related products
- Offering excellent customer service
- Creating engaging content or post-purchase experiences that keep customers coming back
AOV focuses on the average value of a single transaction, while Customer Lifetime Value estimates the total revenue you can expect from a customer throughout their entire relationship with your business, factoring in repeat purchases and retention.