September 11, 2026
Customer acquisition costs are climbing. For most ecommerce operators, simply buying more traffic is no longer a sustainable way to scale. When every click costs more than it did last year, the focus must shift from how many people visit your store to how much they spend when they get there. This is where average order value becomes the most critical lever in your growth stack.
At Videowise, we see firsthand how brands use high-impact video to transform their bottom line. Understanding what is the average order value is the first step toward improving it. This metric is not just a number on a dashboard; it is a reflection of your pricing strategy, your merchandising effectiveness, and your ability to build trust with a shopper. This guide will cover how to calculate this metric, why it matters for your margins, and how to use video commerce to drive it higher.
Quick Answer: Average order value is the average dollar amount a customer spends each time they place an order on your website. It is calculated by dividing your total revenue by the total number of orders over a specific period.
Average order value tracks the typical amount a customer spends per transaction. Unlike customer lifetime value, which looks at the total revenue a person generates over months or years, this metric is focused on the individual checkout event. It tells you exactly how much revenue you are extracting from every successful conversion.
The formula for calculating this is simple:
Total Revenue / Total Number of Orders = Average Order Value
For example, if your store generated $100,000 in revenue from 1,000 orders in the month of October, your monthly AOV is $100. Most operators track this on a 30-day rolling basis to smooth out daily fluctuations. However, during high-velocity periods like Black Friday or a major product drop, tracking it daily allows you to see how specific promotions or site changes impact basket size in real-time.
For a deeper look at using video to track average order value and revenue, explore Videowise’s guide to shoppable video performance.
It is important to remember that this is a transaction-based metric. If one loyal customer places three separate orders of $50 in a month, they contribute three data points of $50 to your calculation. They do not count as one $150 data point. This distinction matters because it helps you understand if your current site experience encourages shoppers to bundle items together or if they are forced to make multiple small purchases, which increases your shipping and fulfillment costs.
Every order your store processes comes with a set of fixed and variable costs. You pay for the ad click that brought the shopper to the site. You pay for the pick-and-pack labor in the warehouse. You pay for the shipping label and the cardboard box. You pay a percentage of the transaction to your payment processor.
When you increase your average order value, you are essentially spreading those fixed costs over a larger revenue base. A $50 order and a $100 order often cost nearly the same amount to acquire and fulfill. By doubling the order value, you significantly increase the contribution margin of that transaction.
Customer acquisition cost, or CAC, is the total spend required to get one new customer to buy. If your CAC is $30 and your order value is $40, your margins are razor-thin after you account for the cost of goods sold. If you can move that order value to $70 without increasing your CAC, you have effectively transformed the profitability of your entire marketing engine.
We often talk about revenue per session, or RPS, as the ultimate health metric for an ecommerce store. RPS is the product of your conversion rate (the percentage of visitors who buy) and your average order value. If your conversion rate stays flat but your order value goes up, your RPS increases. This means every single person who visits your site—even those who don't buy—becomes more valuable in the aggregate.
For more context, read Videowise’s video commerce ROI measurement guide.
Key Takeaway: Average order value is the most effective way to increase profitability without increasing marketing spend. Higher order values allow you to outspend competitors on customer acquisition while maintaining healthy margins.
Operators often ask what a "good" average order value looks like. There is no universal answer because the metric is heavily dependent on your product category and pricing tier. A luxury jewelry brand and a CPG (consumer packaged goods) brand selling organic soap will have vastly different baselines.
The most important benchmark is your own historical data. You should evaluate your current performance against the same period last year. This accounts for seasonality, as holiday shopping almost always drives a natural spike in basket size compared to the summer months.
Increasing this metric requires a mix of psychological triggers and functional site improvements. The goal is to make the shopper feel like adding another item to the cart is a benefit to them, rather than a cost.
This is the most common tactic for a reason: it works. Customers have a psychological aversion to paying for shipping. They would often rather spend $15 on an extra product they might need than pay $10 for a shipping label.
To set this correctly, look at your current average order value. Set your free shipping threshold roughly 20% to 30% above that average. If your average is $75, set the threshold at $100. This provides a clear, attainable goal for the shopper to reach.
Bundling involves grouping related items together at a slightly discounted price compared to buying them individually. This increases perceived value. For an operator, it’s a way to move more inventory in a single shipment.
Upselling is encouraging a customer to buy a more expensive version of the product they are looking at. Cross-selling is recommending a related product.
The key to effective upselling is timing. Showing a "Pro" version of a product on the product detail page (PDP) is an upsell. Showing a cleaning kit for that product in the cart is a cross-sell. Both tactics rely on the customer already being in a high-intent "buying" mindset.
Standard static images and text descriptions can only do so much to build the confidence required for a large purchase. Video commerce allows brands to demonstrate value in a way that static content cannot. When a shopper sees a product in motion or sees it being used by a real person, their hesitation decreases.
For additional implementation ideas, see Videowise’s complete shoppable video guide.
By integrating shoppable video directly into product pages, you can show the product as part of a complete system. We have seen that when brands use our shoppable video features to tag multiple products within a single video, shoppers are much more likely to add more than one item to their cart.
For example, a fitness brand might show a video of an athlete working out. By tagging the leggings, the sports bra, and the gym bag in that one video, the brand creates a "Get the Look" experience. This turns a single-item search into a multi-item order.
User-generated content (UGC) is a powerful tool for increasing the value of an order. Shoppers are often hesitant to buy your most expensive, "hero" products because the risk of disappointment is higher. Seeing video reviews from other customers provides the social proof needed to click "buy" on a high-ticket item.
Customer stories from Videowise brands show how ecommerce teams use shoppable video and UGC to support measurable revenue outcomes. Our UGC strategy tools allow operators to import these videos from social platforms and place them at the point of purchase. This removes the "trust gap" that often prevents a shopper from upgrading to a premium version of a product.
Myth: Video will slow down my store and hurt conversion.
Fact: High-performance video commerce platforms use specialized infrastructure to deliver video without impacting page speed or Core Web Vitals.
A common fear among ecommerce directors is that adding rich media like video or interactive carousels will slow down the site. This fear is grounded in reality—slow sites kill conversion rates. If a page takes too long to load, the shopper leaves before they can even see your upsell offers.
Core Web Vitals are a set of metrics used by Google to measure user experience, specifically loading speed, interactivity, and visual stability. When implementing any strategy to increase order value, you must ensure your infrastructure can handle it.
We built our platform to be performance-first. This means the video content is optimized to load efficiently, ensuring that your site remains fast even as you add high-definition shoppable content. Fast-loading pages keep shoppers engaged longer, giving them more time to discover additional products and increase their basket size.
To truly understand the impact of your efforts, you need to look at more than just the raw AOV number. You need to understand which content and which placements are actually driving those higher-value orders.
For a practical framework, read how to make shoppable video that drives revenue.
Standard analytics might tell you that your order value went up, but they won't tell you why. By using content performance analytics, you can see the direct and influenced revenue for every video on your site.
You might discover that shoppers who watch a specific product demo video have a 25% higher average order value than those who don't. This insight allows you to prioritize that video across more pages. We provide these deep-funnel metrics so operators can stop guessing and start doubling down on what actually moves the needle.
While we are focusing on average order value, it should always be viewed alongside your conversion rate. The goal is to increase the total amount of money you make from every visitor.
By focusing on RPS, you ensure that your tactics to increase order value aren't inadvertently scaring away customers and lowering your overall revenue.
If you are an operator looking to improve this metric today, you can follow a structured approach to implementation.
Step 1: Analyze your current baseline. / Pull your data from the last 90 days. Segment it by new vs. returning customers to see who spends more.
Step 2: Set a shipping threshold. / Identify your current average and set a free shipping limit 20-30% higher. Make this threshold visible on every page with a header bar.
Step 3: Deploy shoppable video on high-traffic PDPs. / Use our platform to add video to your top 10 products. Tag related items in those videos to encourage cross-selling.
Step 4: Monitor and iterate. / Use performance analytics to see how these changes impact your metrics over the next 30 days. Adjust your bundles and tags based on what people are actually clicking.
Bottom line: Increasing average order value is about reducing friction and increasing perceived value. When you make it easy for customers to see the benefit of buying more, your revenue grows efficiently.
The trend in ecommerce is moving away from static catalogs toward interactive, media-rich experiences. Shoppers now expect the same level of entertainment and information they get on social media when they visit an ecommerce store.
AI-powered content intelligence is making it easier for brands to scale these experiences. Tools like AI Clips allow you to take long-form content and automatically turn it into short, shoppable snippets that are perfect for mobile browsing. This means you can provide a high-value shopping experience across your entire catalog without needing a massive production budget.
At Videowise, we are committed to helping brands turn video into a measurable revenue channel. Whether it is through on-site shoppable video, live shopping experiences, or advanced UGC management, our focus is always on the metrics that matter most: conversion, AOV, and revenue per session.
By treating average order value as a strategic priority rather than a passive observation, you can unlock a new level of growth for your Shopify store. It is the key to building a brand that is not just popular, but profitable.
Average order value measures the revenue from a single transaction at a specific point in time. Lifetime value (LTV) measures the total revenue a customer generates for your business across their entire relationship with your brand. While AOV is about individual order efficiency, LTV is about long-term customer retention and loyalty.
Not necessarily. While a higher AOV generally improves margins by spreading fulfillment costs, you must also consider the cost of goods sold (COGS) and the cost of any discounts used to drive that higher value. If you offer a 30% discount to get a customer to spend $100 instead of $70, your total profit may actually be lower despite the higher order value.
On mobile, real estate is limited, so visual impact is crucial. Shoppable video and "swipeable" stories are highly effective because they mimic the social media behavior shoppers are already comfortable with. Keeping the checkout process fast and ensuring your video content doesn't slow down the mobile experience are also critical factors.
For practical examples, read how to use shoppable videos on an ecommerce store.
Tracking AOV in isolation can be misleading because a strategy that increases order size might also decrease your overall conversion rate. Revenue per session (RPS) combines both metrics, giving you a holistic view of how effectively you are monetizing your traffic. If your AOV goes up but your RPS goes down, it means your higher prices or bundles are driving away too many customers.
If you’re ready to test shoppable video on your Shopify store, install Videowise from the Shopify App Store or book a personalized demo.
