What is average order value (AOV)?
Growth economics & retention
How is AOV calculated?
Divide revenue by orders, for the same period.
The sum is easy. The inputs are not. Decide first whether revenue is before or after discounts, VAT and returns. Our convention: write that choice next to the number, every time. Two reports with different answers may both be right. They just counted different revenue.
Why does AOV matter?
A higher AOV spreads the cost of getting a customer over more revenue. That is the logic behind free-delivery thresholds and bundles.
But revenue per order is not money kept per order. A rise in AOV can come from discounts, from products with thin margins or from items that come back.
Example (illustrative): AOV rises from €50 to €60 after a bundle offer. The bundle includes a low-margin product and a discount. Contribution margin per order falls from €20 to €18. Revenue looks better. The bank balance does not.
For ZFD: We ask what happened to contribution margin per order, not only to AOV. Our convention: contribution margin is revenue minus the variable costs that grow with every order, before marketing.
Worked example
Easily confused with
AOV (average order value) vs Gross margin
The share of revenue left after the direct cost of the products sold. It is a percentage, AOV is an amount.
AOV (average order value) vs Conversion rate
How many visits become orders. AOV is how big each order is. Both move revenue, in different ways.
AOV (average order value) vs Contribution margin
What is left per order after variable costs. AOV is what comes in, before those costs.
AOV (average order value) vs Basket size
Often used as a synonym. Be careful: it can mean item count rather than value.
To see how order value and margin move the point where ads stop losing money, try the break-even ROAS calculator.
FAQ
Is a higher AOV always better?
No. It helps only if you keep more money per order. Discounts, returns and thin-margin add-ons can raise AOV and lower what you keep.
Is AOV calculated before or after VAT and returns?
It depends on who calculates it. Ask, and write it next to the number.
Is AOV the same as customer lifetime value?
No. AOV is one order. Lifetime value looks at all orders from a customer over time.
Sources
Let’s find what’s actually working.
Next step. Check how your order value affects your ads. Use the Is your ROAS real? calculator.