# Average order value (AOV)

URL: https://tnb-tech.com/en/glossary/average-order-value/

## What is average order value (AOV)?

Average order value, or AOV, is revenue divided by the number of orders in the same period: what a customer spends in one purchase. It tells you how much an order can cost to win and still pay, and whether changes to the basket are working — a free-shipping threshold, bundles, a cross-sell. Read it next to conversion rate and margin, never on its own, and keep both figures on the same period.

**Example**

A shop records 620 orders and €27,900 of revenue in a month. Average order value is €27,900 ÷ 620 = €45.

Free delivery over €60 is switched on. One hundred and fifty orders that used to average €47 now average €63: €16 more each, or €2,400 of extra revenue. The new average is €30,300 ÷ 620 = €48.87. Delivery on those 150 orders is now the shop’s cost, and at €5 a parcel that is €750. What is left is €1,650 before the cost of the added goods. The amounts are illustrative.

The same arithmetic shows the other side. Set the threshold too high and some small orders never happen, so the order count and the average are watched together rather than one of them.

**Why it matters for a business**

Average order value sets what you can pay for a click and for a customer. On a €45 order at a 30 per cent margin there is €13.50 of gross profit, and advertising, delivery and handling come out of it. Lifting the average by 10 per cent does what 10 per cent more orders would do, without buying any more traffic.

Fulfilment costs barely move with basket size. Packing, courier and handling cost about the same on a €20 order and on an €80 one, which is why the larger order is the more profitable one. Split the figure by channel too: orders from search, from email and from paid ads rarely carry the same value, and conversion rate often moves the other way.

**How to improve it**

- A free-shipping threshold slightly above today’s average, shown in the basket with the gap to it.
- Bundles and recommendations that add to the chosen product instead of replacing it.
- Larger pack sizes and price steps where the product is bought again.
- Better pages for expensive products: photographs, dimensions, warranty, delivery time.
- A split by channel and device before anything is changed for the whole shop.The basket, the recommendations and the delivery threshold are settings inside the shop itself, so what an online store build covers decides how far they go.

- Services: [Online store development](https://tnb-tech.com/en/services/online-store-development/)
- Glossary: https://tnb-tech.com/en/glossary/