Does average order value include shipping and tax?

It depends on how you choose to measure it. Many stores exclude taxes and sometimes shipping to focus on product revenue. What matters most is using the same definition every time, so changes reflect customer behaviour, not a change in method.

What is the fastest way to raise AOV?

Bundles and a free shipping threshold set just above your current AOV are usually the quickest wins. Both give shoppers a clear reason to add another item without discounting your best-selling products across the board.

Average order value (AOV)

Average order value (AOV) is the average amount a customer spends per order, found by dividing total revenue by the number of orders in a period.

What is average order value?

Average order value, or AOV, tells you how much a typical order is worth. It is one of the three core levers of ecommerce revenue, alongside traffic and conversion rate. AOV matters a lot for stores that buy traffic with ads. If each visitor costs the same but spends more per order, every sale becomes more profitable, and you can afford to pay more to acquire customers than competitors with a lower AOV. Raising AOV often takes less effort than finding new traffic, because you are working with shoppers who are already buying from you.

How to calculate average order value

To calculate AOV, divide total revenue by the number of orders in the same period. Use revenue from orders only, and decide whether to include or exclude shipping, taxes and refunds, then stay consistent. For example, if a store earns 12,000 dollars from 200 orders in a month, the AOV is 12,000 divided by 200, which equals 60 dollars. If the next month it earns 13,500 dollars from 200 orders, the AOV rises to 67.50 dollars. Revenue grew by 1,500 dollars without a single extra order, purely because customers spent more each time.

What is a good average order value?

There is no single good AOV, because it depends heavily on the niche, price points and product mix. A store selling phone cases will typically have a much lower AOV than one selling furniture or premium skincare bundles. The most useful benchmark is your own history and your own costs. AOV should be high enough that the profit per order covers what you spend on ads to get that order. A practical check is to compare AOV with your cost per purchase: if acquiring an order costs nearly as much as the profit it brings, raising AOV becomes urgent.

How to improve average order value

Offer bundles that combine products people often buy together at a small saving. Add a free shipping threshold set a little above your current AOV, so shoppers add one more item to qualify. Show relevant add-ons and upsells on the product page, in the cart and right after checkout. Use quantity discounts, such as a lower price per unit when buying two or three. Promote higher-value products and gift sets in ads and emails. Finally, test post-purchase offers that let customers add an item with one click, since they have already decided to buy and trust the store.

Average order value vs customer lifetime value

Average order value measures what a customer spends in a single order. Customer lifetime value, or LTV, measures the total a customer spends across all their orders over time. A store can have a modest AOV but a high LTV if customers come back often, such as with consumables or subscriptions. Both matter for ad budgets. AOV tells you what the first order can pay for, while LTV shows what a customer is worth overall. Brands with strong repeat purchases can often afford to break even, or even lose a little, on the first order.

Free tool: Break-even ROAS Calculator

Questions

Does average order value include shipping and tax?: It depends on how you choose to measure it. Many stores exclude taxes and sometimes shipping to focus on product revenue. What matters most is using the same definition every time, so changes reflect customer behaviour, not a change in method.
What is the fastest way to raise AOV?: Bundles and a free shipping threshold set just above your current AOV are usually the quickest wins. Both give shoppers a clear reason to add another item without discounting your best-selling products across the board.