Average order value (AOV) is the mean value of a completed order over a given period. It tells you how much a typical customer spends each time they buy, which directly affects how much you can afford to spend acquiring them.
Formula
AOV = Total revenue / Number of orders
For example: £15,000 in revenue from 300 orders gives an AOV of £50.
Worked example
Your store generates £22,500 in revenue across 450 orders in a month.
AOV = £22,500 / 450 = £50
If your gross margin is 40%, each order contributes £20 in gross profit before any advertising cost. That means your CPA must stay well below £20 for advertising to be profitable.
Why AOV matters
AOV determines how much you can profitably spend to acquire a customer. A higher AOV means you can afford a higher CPC or CPA and still remain profitable. Two businesses with identical conversion rates and CPAs can have very different economics if their AOVs differ.
AOV also interacts with ROAS targets. A lower AOV means each order contributes less gross profit, so you need a higher ROAS to cover your ad spend and break even. A higher AOV gives you more headroom: the same margin produces more gross profit per order, so a lower ROAS can still be profitable. Compare your AOV and margin against your actual ROAS to see whether your campaigns are covering their costs.
What drives AOV
- Product mix: products with higher prices naturally increase AOV.
- Bundling and cross-sell: if your product pages surface complementary items, customers may add more to their basket.
- Free delivery thresholds: setting a free delivery threshold above your current AOV encourages customers to add more items.
How Vendably calculates it
Vendably computes AOV in its Intelligence pipeline from your order data. It divides total revenue by total orders for the period and surfaces the result on the Intelligence dashboard.
When no order feed (Shopify, WooCommerce, BigCommerce, or file import) is connected, Vendably falls back to Google Analytics 4 data to derive order counts, so AOV is then based on GA4 at daily granularity. Connect a direct order feed for the most accurate AOV figures.
What good looks like
AOV has no universal benchmark because it depends entirely on your product category and price points. The number that matters is AOV relative to your costs:
- Your AOV must be high enough that gross profit per order (AOV multiplied by margin) exceeds your CPA after accounting for fulfilment and returns.
- A useful internal benchmark: track AOV month-on-month and by product category. A falling AOV on a flat revenue line means you are processing more, lower-value orders, which can quietly erode margin.
- Compare AOV against your free-shipping threshold. If AOV is consistently just below the threshold, customers are not being nudged to top up their basket.
How to improve it
Raise the basket value before checkout
- Surface complementary products on product and cart pages (cross-sell). A customer buying a coffee machine is a natural candidate for descaled tablets or replacement filters.
- Bundle related products at a slight discount. The bundle price can be lower than buying items separately while still raising the total transaction value.
- Set a free-shipping threshold slightly above your current AOV. Customers who are close to the threshold often add a low-cost item to qualify.
Shift the product mix
- Identify which categories or product lines carry the highest AOV and direct more ad budget towards them. A rising CPA on high-AOV products may still be more profitable than a low CPA on low-AOV lines.
- Review whether volume discounts (for example, buy three, save 10%) are being set at a level that meaningfully lifts AOV or simply gives margin away.
Reduce friction on larger purchases
- For higher-price items, clear returns policies and visible trust signals (verified reviews via the Trust capability) reduce the hesitation that causes customers to buy a smaller version or nothing at all.
- Instalment or buy-now-pay-later options can unlock purchases that customers would otherwise defer.
Pair AOV tracking with CPA and ROAS so you can see the full economics of each campaign rather than optimising cost in isolation.