Average order value: how to raise it without giving the margin away
What the typical order is worth, worked out as revenue over orders. Easy to lift with a discount. Only worth lifting if the margin comes with it.
- 005Average Order Value (AOV)
- The average amount spent each time a customer places an order. In email marketing, understanding AOV helps tailor campaigns to encourage higher-value purchases through targeted promotions and product recommendations.
- Measured as
- Revenue divided by the number of orders over the same period
- In Shopify
- Gross sales less discounts, divided by orders, before tax and shipping, ignoring later returns
- Read it with
- Order count and margin, because either can fall while it rises
How average order value is worked out, and where it misleads
Divide revenue by the number of orders in the same period. Shopify's version takes discounts off first and leaves tax, shipping and later returns out, so check which version a report is quoting before you compare two of them.
It's a mean, so a handful of big orders can drag it up on their own. One customer kitting out an office, or a trade order that came through the shop, and the month looks brilliant. The median order, the one in the middle, is much harder to fool.
Raising order value without a discount code
- A free delivery threshold set a little above today's typical basket
- Bundles that pair a bestseller with something slower moving
- Add-ons on the product page and in the basket, chosen by what people actually buy together
- Bigger sizes or multipacks that work out cheaper per unit than the single
Each of those lifts the basket without repricing the catalogue. A sitewide code that rewards bigger baskets lifts it too, but it hands margin back on every order, including the ones that would have been big anyway.
Where email moves average order value
The inbox is where the second item gets sold, and none of these emails needs a code to do it.
| How it lifts order value | |
|---|---|
| Post-purchase cross-sell | Suggests what goes with what they've just bought |
| Abandoned cart reminder | Points out how close the basket is to free delivery |
| Bundle campaign | Sells a set at a fair price, no code needed |
| Replenishment reminder | Offers the bigger size when the small one runs out |
Watch order count beside it. Push order value up and order count can fall, if the threshold or the bundle priced out the smaller, regular buyer. The number that settles it is customer lifetime value, which counts every order a customer places, not just the size of one. The cross sell flow is where we'd start.
Related terms
FAQs
Is a higher average order value always better?
No. It's better if margin and order count hold. A threshold set too high can lose you the small regular orders, and a code can lift order value while every order earns less. Judge it next to order count, margin and how often people come back.
Where should a free delivery threshold sit?
Usually a little above your typical basket, so an ordinary order needs one more item to qualify. Set it far above and people give up, or leave. Test it against order count and margin, not order value alone, and remember free delivery is a real cost on every order that gets it.
Why did our average order value drop during a sale?
Often because more people bought a single discounted item, and Shopify's version of the sum takes the discount off the order value too. It isn't necessarily bad. Check how many of those buyers were new, and whether they came back later at full price.
Rather we explained it on your own account?
Bring your Klaviyo account to a growth consultation. We'll walk through what this means for your numbers, in plain English, and what we'd fix first.
Half an hour with Theo, our founder.
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