Average Order Value (AOV) indicates how much a customer spends on average per completed order.
How it works
It is calculated by dividing revenue by the number of orders in the same period. It can increase through product mix, bundles, free-shipping thresholds, upselling and cross-selling, but should be evaluated with margin and conversion rate.
Practical example
With $100,000 in revenue and 2,000 orders, AOV is $50. If a bundle strategy raises it to $55 without reducing conversion, the same order base generates $10,000 in additional revenue.
Why it matters
It is an important growth lever because it can increase revenue without necessarily increasing traffic or the number of acquired customers.
What to watch
Increasing AOV through aggressive discounts can grow basket size while hurting margin. The goal is not to maximize order value at any cost.