Why AOV matters
AOV is one of three multiplicative levers that determine LTV (alongside purchase frequency and customer lifespan). Lifting AOV 15% gives you the same effect on LTV as extending lifespan 15%, but it’s usually faster and cheaper.
AOV is also what makes CAC sustainable. A €40 CAC with a €60 AOV leaves almost no room for margin. The same €40 CAC against a €120 AOV opens up real headroom for the rest of the unit economics.
How AOV is calculated
AOV = Total Revenue ÷ Number of Orders
Some teams calculate AOV on net revenue (after discounts and returns) and some on gross. Both are valid, be explicit about which you mean. Net AOV is the better number for forecasting. Gross AOV is the better number for promotion analysis.
What lifts AOV
Three predictable levers:
- Bundles and multi-packs. Make it easier to buy more than one thing at a time. Often 10–25% AOV lift with little execution risk.
- Free-shipping thresholds. Customers nudge their carts up to the threshold. A €50 threshold typically lifts AOV by €5–€10 on average.
- Upsells and cross-sells. Recommended-product modules in cart and at checkout. Smaller per-order lift but compounds across all orders.
A fourth, slower lever is mix shift: lean merchandising toward higher-priced SKUs, or introduce a premium tier.
Common mistakes
- Optimising AOV at the cost of conversion rate. Aggressive upsells can suppress checkout completion. Watch both.
- Ignoring discount mix. Heavy promo periods inflate order count and depress AOV, compare like with like.
- Using a single AOV number across cohorts. New-customer AOV and returning-customer AOV often differ by 30%+. Average them and you misread both.
FAQ about AOV (Average Order Value)
How is AOV calculated?
AOV equals total revenue divided by number of orders in the same period. Net AOV (after discounts and returns) is better for forecasting. Gross AOV is better for promo analysis.
What is a good AOV?
AOV is good when it sustains profitable CAC at your contribution margin. There is no universal number, track first-order AOV and repeat-order AOV separately to see what is really happening.
How do I increase AOV?
The three reliable levers are bundles (sell multiple items together), free-shipping thresholds (customers fill carts up to the bar), and upsells at cart and checkout.