What does AOV stand for?

AOV stands for average order value: total revenue divided by the number of orders in a period.

What is a good average order value?

It depends on your product and margins. A useful test is whether the margin on an average order covers a large part of what it costs to acquire that order.

How can I increase my average order value?

Bundles, free-shipping thresholds, cross-sells, upsells and volume pricing are the most common methods. Test them one at a time.

Average Order Value (AOV): Formula and How to Increase It

Average order value (AOV) is the average amount a customer spends in a single order. Divide total revenue by the number of orders in the same period. It matters most for e-commerce, marketplaces and any business where customers buy in separate transactions.

By Javier Alonso, Founder & CEO. Updated 2026-10-25.

Formula

AOV: Total revenue ÷ Number of orders (Decide whether revenue includes shipping, tax and discounts, and keep it consistent.)

Worked example

An online store makes $48,000 from 1,200 orders in a month.

AOV = $48,000 ÷ 1,200 = $40.

If it costs $30 in advertising to win a first order, each first order earns back most of its acquisition cost only if the gross margin on $40 is high. Raising AOV to $50 makes the same advertising far more profitable.

Why AOV matters

AOV links directly to customer acquisition cost. If acquiring a customer costs more than the margin on their first order, you rely on repeat purchases to profit, which makes repeat rate and lifetime value critical. Raising AOV is often the fastest way to make paid channels work.

Ways to increase AOV

Bundles: sell related items together at a small discount.
Thresholds: free shipping or a gift above a spend level just over your current AOV.
Cross-sells: suggest complementary items at checkout.
Upsells: offer a larger size or better tier.
Volume pricing: lower unit prices for larger quantities.

Test one change at a time, and watch conversion rate as well. A higher AOV with fewer orders may earn less overall.

AOV vs ARPU

AOV is revenue per order. Average revenue per user (ARPU) is revenue per customer over a period, which can include several orders or a subscription. Subscription businesses usually track ARPU and MRR rather than AOV.

For your role

Service providers: For productised services, AOV is the average project or package value. Tiered packages are the service equivalent of upsells.

Primary sources

16 Startup Metrics — Andreessen Horowitz

Common questions

What does AOV stand for?: AOV stands for average order value: total revenue divided by the number of orders in a period.
What is a good average order value?: It depends on your product and margins. A useful test is whether the margin on an average order covers a large part of what it costs to acquire that order.
How can I increase my average order value?: Bundles, free-shipping thresholds, cross-sells, upsells and volume pricing are the most common methods. Test them one at a time.