Average order value (AOV)
Short definition
Average order value (AOV) shows how much a customer typically spends across a single completed order.
It is calculated by dividing total revenue by the total number of orders. Raising this figure, rather than chasing new customers, is one way to earn more revenue from the same customer base. Even with a fixed advertising budget, a rise in this figure feeds straight through to profit.
A free shipping threshold, complementary product suggestions and bundled offers are common ways to lift AOV. These methods stay profitable as long as they do not push conversion rate down; a threshold set too high can push a visitor away from the basket instead. A suggestion placed well on a product page can achieve the same lift without feeling pushy.
AOV is one component of customer lifetime value; raising it alone will not necessarily improve total revenue if purchase frequency falls at the same time.
Why it matters
Raising average order value is one of the most direct ways to increase revenue without touching customer acquisition cost. Even with a fixed advertising budget, a higher AOV improves profitability. Growth does not always have to come from finding new customers; growing the basket of an existing one works too.
Illustrative example
When a spa chain offered a three-session package instead of a single session, average order value rose noticeably, producing more revenue from the same number of customers.
