---
title: "Average order value (AOV): definition and formula"
description: "Total order revenue divided by the number of orders. Useful for spotting a trend, misleading for setting thresholds because it hides the shape of your orders."
url: https://offersuite.io/glossary/average-order-value
updated: 2026-10-13
---

# Average order value (AOV)

Total order revenue divided by the number of orders. Useful for spotting a trend, misleading for setting thresholds because it hides the shape of your orders.

## In plain words

Average order value is revenue divided by the number of orders over a period. Bundles, upsells and free-shipping thresholds are usually sold as ways to raise it.

It is a blunt number. Two stores with the same AOV can have very different orders: one with most orders near the average, another with many small orders and a few very large ones. Offers that act on order value, thresholds especially, depend on that shape and not on the average.

## Formula

- AOV = total order revenue ÷ number of orders

## Worked example

In the free-shipping example, 980 orders a month spread from $25 to $100 average $41.73. The usual rule of thumb sets free shipping at AOV plus shipping cost divided by margin, $55.37 here.

At $50.00, 240 of those orders already qualify, and the threshold gives away $1,680.00 of shipping a month. The average never shows that.

### The example order

A $40.00 bag of coffee, shipped free, every cost counted

Revenue $40.00 to contribution margin $15.36 (38.4%)

Revenue

$40.00

Cost of goods

−$12.00

Pick and pack

−$1.18

Packaging

−$0.50

Shipping label

−$7.50

Card fee per order

−$0.30

Refunds

−$2.00

Card processing

−$1.16

Contribution margin

$15.36

2 declared kinds cost nothing on this option

Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.

## A higher AOV is not higher profit

AOV rises when a discount makes customers buy more, and profit can still fall if the discount costs more than the extra units earn. Report contribution margin per order or profit per visitor next to AOV, and treat AOV on its own as a direction, not a result.

## Using it

Use it to watch a trend, alongside the distribution of order values. Before setting a threshold or a bundle tier, look at the orders around the level you have in mind: how many sit just below it and could top up, and how many already sit above it and will take the benefit for free. Those two counts decide the result, and neither is in the average.

## Related

- [Glossary **Glossary of offer economics** The terms behind offer profit, defined plainly with their formulas and a worked number: contribution margin, profit per visitor, break-even lift and more.](https://offersuite.io/glossary)
- [Calculator **Free shipping threshold calculator** Price a free-shipping threshold with the shipping you give away on orders that already reach it, and the share of smaller orders that must top up to pay for it.](https://offersuite.io/calculators/free-shipping-threshold)
- [Calculator **Bundle pricing calculator: shipping, subscriptions** Price a bundle against a single unit, one-time and subscribed, with the shipping and pick costs it saves, and the conversion it can lose and still earn as much.](https://offersuite.io/calculators/bundle-pricing)
- [Glossary **Free-shipping threshold: definition and formula** The order value above which shipping is free. It costs the shipping revenue of every order already above it, and pays only if enough smaller orders top up.](https://offersuite.io/glossary/free-shipping-threshold)
- [Glossary **Contribution margin: definition and formula** What an order keeps after every cost that grows with it: product cost, fulfilment, shipping, card fees and refunds. The number an offer should be judged on.](https://offersuite.io/glossary/contribution-margin)
- [Glossary **Profit per visitor: definition, formula and example** The profit an offer earns for every visitor who sees it: margin per order times conversion rate. It weighs a lower price against more buyers fairly.](https://offersuite.io/glossary/profit-per-visitor)