The third lever of revenue growth, alongside traffic and conversion. AOV improvements often have better ROI than driving more traffic because they lift revenue without proportionally raising CAC.
Definition
AOV (Average Order Value) - the average revenue per transaction, calculated as total revenue divided by number of orders during a period.
Formula
AOV = Total Revenue ÷ Number of Orders
Common uses
- E-commerce optimization - the standard target for cart-level improvements
- Pricing analysis - shows the impact of pricing changes on transaction size
- Channel comparison - different channels often produce different AOVs
Watch out
Discount-driven AOV improvements often hurt margin. A bundle that raises AOV from $50 to $80 but drops gross margin from 50% to 35% can lower gross profit per order.