What is Average order value (AOV)?
Average order value (AOV) is total revenue divided by the number of orders in the same period. It is one of the two factors behind revenue per visitor, the other being conversion rate, and it is usually the cheaper of the two to move — raising what buyers spend needs no extra traffic at all.
The formula
AOV = revenue ÷ number of ordersAnd its place in the chain that produces revenue:
Revenue = visitors × conversion rate × average order valueThree multiplicative levers. A 10% gain in each compounds to a 33% revenue gain, which is usually easier to find than a 33% gain in traffic alone.
Why the mean misleads
AOV is an average, and order values are almost never distributed symmetrically. A handful of large orders drag the mean above what a typical customer actually spends, so a rising AOV can mean “we won two enterprise deals” rather than “customers are spending more”.
Look at the median alongside it. When the mean rises and the median does not, the change lives in the tail — real revenue, but not a repeatable pattern to build on. Better still, look at the distribution: most pricing decisions become obvious once you can see where the orders actually cluster.
For subscription businesses
AOV translates badly to recurring revenue, because the meaningful figure is not one payment but the ongoing rate. Use average revenue per account and monthly recurring revenue instead. Where AOV still applies is at the moment of first purchase — which plan a customer starts on is a real, single-decision number, and it moves with pricing-page design in ways worth measuring.
Segment it by channel
AOV varies by traffic source, often sharply. A comparison-shopping referral and a long-form review article send buyers with different budgets. Averaging across all of them produces a number that describes no channel in particular — and hides the source whose visitors are, individually, worth the most.