Average Order Value (AOV)

A practical example

Example: a kitchenware brand runs a free-shipping threshold.

If AOV is calculated gross of shipping fees and unadjusted for refunds, the threshold may look like it lifted order value when refunded orders and shipping revenue are doing part of the work.

What to evaluate before investing

• Ask whether the vendor's AOV calculation includes or excludes shipping, taxes, and gift cards, and whether refunds reduce it automatically or only on export.
• Check whether the denominator can be defined, for example excluding unpaid, cancelled, or test orders, and whether the rule is applied consistently across dashboards.
• Verify that AOV can be segmented by channel, campaign, or customer cohort, so tactics can be judged against a relevant baseline rather than a blended average.

Limitations and tradeoffs

AOV is an average, so a few very large orders can mask a falling typical order size; pair it with a median or distribution view before drawing conclusions.