August 30, 2026
Customer acquisition costs are rising, and the competition for attention on Shopify is more intense than ever. For most ecommerce operators, the primary instinct is to drive more traffic. However, scaling a brand profitably in 2026 requires a focus on the traffic you already have. Average Order Value (AOV) is one of the most powerful levers in your growth stack because it directly improves your unit economics without requiring an increase in ad spend.
At Videowise, we focus on turning on-site engagement into measurable revenue by optimizing every step of the shopper journey. Understanding how to work out average order value is the first step in identifying where your store is leaking potential revenue and where you can extract more value from every checkout. This guide will cover the core formulas, the companion metrics that provide context, and the strategies we use to help brands scale their revenue per session.
Quick Answer: To work out average order value, divide your total revenue by the total number of orders over a specific time period. The formula is: Total Revenue / Total Number of Orders = Average Order Value.
The basic calculation for average order value is straightforward, but its implications for your business are deep. To get an accurate number, you must ensure your data inputs are clean and consistent across your reporting tools.
The standard formula is:
Total Revenue ÷ Total Number of Orders = Average Order Value
For example, if your store generated $100,000 in revenue last month from 2,000 orders, your AOV is $50. This number represents the average amount a customer spends every time they complete a transaction. It is a transaction-level metric, not a customer-level metric. This distinguishes it from Lifetime Value (LTV), which tracks the total spend of a single customer over their entire relationship with your brand.
To get a useful result, you must decide how you define "revenue" and "orders." Most ecommerce directors use net revenue rather than gross revenue for this calculation. Gross revenue includes taxes and shipping fees, which can artificially inflate your AOV. If a customer spends $40 on a product and $10 on shipping, an AOV of $50 is misleading because that extra $10 does not contribute to your product margins; it simply covers a cost.
Net Revenue should exclude:
Order Count should only include:
AOV is more than just a number on a dashboard; it is an indicator of your store's health and the effectiveness of your merchandising strategy. When you increase the amount each customer spends, you improve your return on ad spend (ROAS) and your contribution margin.
If it costs you $20 to acquire a customer (Customer Acquisition Cost or CAC), and your AOV is $30, your margin is razor-thin after factoring in cost of goods sold (COGS) and fulfillment. If you can increase that AOV to $45 using the same acquisition spend, your profitability scales exponentially.
Key Takeaway: Increasing AOV is often the most cost-effective way to grow revenue because it leverages existing traffic that has already been paid for through marketing or SEO efforts.
While AOV is vital, we often encourage operators to look at Revenue per Session (RPS). This metric combines AOV and Conversion Rate (CVR) to provide a holistic view of store performance.
The formula for RPS is:
Total Revenue ÷ Total Sessions
If your AOV is high but your conversion rate is very low, your RPS will suffer. A balanced growth strategy focuses on keeping conversion rates stable while nudging the basket size upward. This is where high-impact content, such as shoppable video for ecommerce, becomes a primary tool for growth.
To make AOV actionable, you cannot simply look at the store-wide average. You need to segment the data to understand what is actually driving behavior. Different customer cohorts and traffic sources will yield wildly different order values.
Customers coming from a high-intent search query on Google might have a different AOV than those clicking an impulse-buy ad on TikTok. By breaking down AOV by channel, you can see where your highest-value customers are coming from and allocate your budget accordingly.
New customers often have a lower AOV as they "test" your brand with a single item. Returning customers, who already trust your quality, are typically more likely to buy bundles or premium versions of your products. If your returning customer AOV isn't significantly higher than your new customer AOV, you may have a gap in your retention and upselling strategy.
If you sell both high-ticket items and small accessories, a store-wide average might be $75, but your high-ticket shoppers are spending $200 while accessory shoppers spend $20. Calculating AOV per category helps you understand which products are the best "hooks" for larger baskets.
Most modern ecommerce platforms like Shopify, BigCommerce, or Adobe Commerce provide an AOV figure in their native analytics. However, these figures can vary based on how each platform handles discounts, returns, and shipping.
Shopify's "Average Order Value" report typically uses the gross sales figure minus discounts. It often includes shipping and taxes unless you filter them out in a custom report. For a more accurate look at merchandising performance, you should export your data and manually subtract the shipping and tax lines before dividing by the total order count.
In GA4, AOV is found under the "Ecommerce purchases" report. GA4 relies on the data layer of your site. If your data layer isn't configured to distinguish between product revenue and total transaction value, including tax, your GA4 AOV will be higher than your actual product AOV.
Errors in how you work out average order value can lead to poor strategic decisions. If your AOV looks higher than it is, you might overspend on acquisition, thinking your margins are safer than they are.
A single wholesale order of $5,000 in a store where the average purchase is $50 will skew your reporting. When calculating AOV for marketing purposes, it is often best to exclude extreme outliers to get a "typical" customer spend figure.
If you calculate AOV based on the initial transaction but have a 20% return rate on high-ticket items, your real AOV is much lower. Operators should regularly look at "Post-Return AOV" to understand the true revenue that stays in the business.
During heavy promotional periods like Black Friday, your AOV might dip because of deep discounts, even though your total revenue is up. Conversely, if you offer a "spend $100, get $20 off" deal, your AOV might actually rise as customers add more to their carts to hit the threshold. Always context-map your AOV against your current promotions.
| Metric | Definition | Why It Matters for AOV |
|---|---|---|
| AOV | Revenue / Orders | Shows the average transaction size. |
| IPP | Items Per Order | Shows if customers are buying multiples or bundles. |
| AIP | Average Item Price | Shows if customers are choosing premium vs. budget items. |
| RPS | Revenue Per Session | Combines AOV and CVR for total site efficiency. |
Once you know your baseline, the goal is to move it. Increasing AOV is a psychological game of reducing friction and increasing the perceived value of a larger purchase.
Free shipping is the most common AOV lever. To find your "sweet spot," look at your current AOV and set your free shipping threshold roughly 15-20% above it. If your AOV is $65, setting the threshold at $75 or $80 encourages shoppers to add one more small item to their cart to "save" on shipping.
Video is one of the most effective ways to build the confidence needed for a larger purchase. When a customer can see a product in motion, understand its scale, and see how it works through UGC, they are more likely to opt for a higher-priced premium version rather than the entry-level model.
Using Videowise Shoppable Video, brands can embed interactive product tags directly into their video content. This allows shoppers to see an entire look or a set of tools in action and add the whole "bundle" to their cart without leaving the video player. This reduces the steps to purchase and naturally increases the number of items in the basket.
Bundling complementary products is a classic merchandising tactic. Instead of just showing a "Frequently Bought Together" list, create a "Complete the Look" or "Starter Kit" bundle that offers a small discount compared to buying the items individually. This increases the Average Item Price (AIP) per transaction and simplifies the decision-making process for the shopper.
The moment right after a customer has committed to a purchase is when they are in their highest "buying mode." One-click post-purchase upsells allow customers to add a relevant item to their order without having to re-enter their credit card details. This is a high-CVR tactic that adds pure margin to the transaction.
Modern ecommerce is no longer just about static images. To drive higher order values, you need to provide an immersive experience that justifies the spend. High-quality video assets—whether they are professional studio shots or authentic UGC—help bridge the "tactile gap" of online shopping.
We see that brands using video often experience higher AOV because video content effectively communicates the value of complex or premium products. Within the Videowise Content Performance Analytics dashboard, operators can track exactly how video views influence total order value. By identifying which videos lead to the highest AOV, you can double down on that content style across your PDPs (Product Detail Pages) and homepages.
Myth: Adding high-quality video to my store will slow down my page speed and hurt my conversion rate.
Fact: Our performance-first infrastructure ensures that video content is delivered without impacting Core Web Vitals. Shoppable video actually improves the user experience by providing more information in a shorter timeframe, leading to higher AOV and CVR.
Setting a goal for AOV requires looking at your historical data and your category benchmarks. If you are in the luxury space, your AOV will naturally be higher but your conversion rate may be lower. If you sell CPG (Consumer Packaged Goods), your goal is likely to increase the number of items per order.
Work out your average order value for the last 12 months. Break it down by month to account for seasonality.
Look at your shipping threshold and your most popular product price point. If your most popular product is $45 and your shipping threshold is $50, you have a natural gap that can be filled with small "add-on" items.
Don't overhaul your site all at once. Start with a shipping threshold change or add shoppable video to your top-selling PDPs. Measure the impact on AOV over a 30-day period.
Always ensure that your push for higher AOV isn't hurting your conversion rate. If you raise prices or shipping thresholds too high, your AOV might go up, but your total revenue might drop because fewer people are completing the checkout process.
Bottom line: AOV is a measure of merchandising effectiveness. By calculating it accurately and segmenting it by channel, you can identify which parts of your funnel are underperforming and apply targeted tactics to increase the value of every visitor.
Mastering how to work out average order value is more than a mathematical exercise; it is a core competency for any ecommerce operator focused on profitable growth. By focusing on net revenue, excluding outliers, and segmenting your data, you gain the clarity needed to make smarter merchandising decisions. Whether through strategic bundling, tiered shipping, or interactive shoppable video, increasing your AOV is the most direct path to scaling your revenue without inflating your acquisition costs.
At Videowise, we are built to help brands turn video content into a measurable revenue channel. Our platform empowers you to create shoppable experiences that not only convert but also drive higher order values through better storytelling and social proof. See how Dr. Dennis Gross increased AOV with shoppable videos.
Ready to see how shoppable video can impact your revenue per session?
Standard AOV calculations can include shipping and taxes if you use gross revenue, but for ecommerce strategy, it is better to use net revenue. Including these external costs can inflate your AOV and give you a false sense of your product margins. To get the most accurate look at customer behavior, subtract taxes and shipping fees before dividing by the total number of orders.
There is no single "good" AOV because it depends entirely on your industry and price points. A brand selling high-end furniture may have an AOV of $1,200, while a beauty brand may have an AOV of $45. The best way to judge your AOV is to compare it against your own historical data and your specific customer acquisition costs to ensure your unit economics are profitable.
AOV measures the value of a single transaction, while LTV measures the total value of a customer over the entire time they shop with your brand. AOV is a short-term metric focused on checkout efficiency, whereas LTV is a long-term metric focused on retention and brand loyalty. Both are important, but AOV is a lever you can pull immediately to improve current cash flow.
Yes, if the tactics used to increase AOV create too much friction, your conversion rate may drop. For example, if you set a free shipping threshold too high, shoppers may abandon their carts rather than spending more. The goal is to find a balance where you increase the basket size without discouraging the purchase entirely, which is why monitoring Revenue per Session (RPS) is critical.
