Average order value is one of the most overlooked metrics in e-commerce, and ignoring it can potentially limit your growth.
While you might keep driving traffic, getting clicks, or even converting. Yet when it comes to revenue, you may find yourself still not reaching its full potential.
This is where understanding and optimizing AOV comes handy.
AOV is the key metric you might be overlooking, whether you’re running a B2B marketplace or a transactional SaaS platform.
AOV is considered to be important. Because when you increase your AOV means you’re generating more revenue per transaction without increasing your marketing spend.
According to Little Stream Software, doubling the AOV from $100 to $200 can actually triple your profit margins.
It jumps from 10% to 30% because fixed costs like acquisition and fulfillment get spread over a larger sale value.
Even a modest 10% bump in AOV can lead to notable profit improvements, especially when customer acquisition costs stay flat.
In this guide, we’ll break down what average order value is, how to calculate it, and why it’s an important metric for ecommerce, SaaS, and marketplace growth.
You’ll discover proven strategies to increase AOV, along with real-world examples and common mistakes to avoid. We’ll also give some tips to track your progress effectively.
What Is Average Order Value (AOV)?
Average Order Value (AOV) is one of the most powerful metrics in ecommerce and digital sales. It tells you the average amount a customer spends each time they make a purchase from your store.
To calculate it, just use this simple formula:
AOV = Total Revenue ÷ Number of Orders
Let’s say your Shopify store generated $70,000 last month from 1,000 orders. Your AOV would be
$70,000 ÷ 1,000 = $70
This means, on average, each customer spent $70 per transaction.
Why does AOV matter to DTC, SaaS and Marketplace?
Boosting your average order value (AOV) isn’t just a revenue hack. It’s a growth strategy that works across business models. Here’s why AOV deserves your attention:
- Higher AOV = More Revenue Without More Traffic: Increasing average order value lets you earn more from existing customers. It improves your ROI without needing additional ad spend or traffic.
- Stronger Profit Margins for DTC Brands: For direct-to-consumer businesses, a higher AOV reduces the impact of fixed costs like packaging and shipping, leading to better profit margins.
- Scalability for SaaS Platforms: In SaaS, AOV reflects not just plan upgrades but also upsells like premium features, team add-ons, and API access. It drives recurring revenue and LTV growth.
- Better Unit Economics for Marketplaces: Marketplaces benefit from bigger carts or bookings. When users buy more per transaction, platform fees and commissions scale up. It improves profitability without raising customer acquisition costs.
- More Room to Reinvest in Growth: A higher AOV gives you financial breathing room to invest in better customer service, product development, or more competitive advertising.
As noted by Velaris, a higher AOV typically indicates that upselling efforts are working and customers are opting into more expensive plans or useful add-ons. Similarly, DealHub also highlights how SaaS companies use product bundling and customer usage data to drive higher AOV through curated offerings and ancillary services.
Why AOV Is a Key Growth Metric
The fact of the matter is acquiring new users is expensive. The cost per acquisition (CAC) continues to rise. Whether you’re pouring money into Meta ads, search campaigns, or influencer partnerships, they all cost a lot.
Optimizing Average Order Value (AOV) is such a game-changer because it lets you grow revenue without touching your ad budget.
Here’s why AOV should be a main focus in your growth strategy:
1. It’s Easier Than Increasing Traffic
Getting more visitors to your site means spending more. But increasing AOV? That’s about making each visit more valuable.
You can earn more from the traffic you already have with the right upsell, bundle, or pricing strategy. It’s a high-leverage move, one that doesn’t require chasing algorithms or increasing your CAC.
2. It Supercharges LTV and CAC Efficiency
Think of average order value as the middle piece in your customer value puzzle. When AOV increases, each customer brings in more revenue per transaction, boosting your customer lifetime value (LTV).
That’s a good thing. Why? Because a higher LTV allows you to spend more on acquiring each customer (CAC) while still staying profitable.
So it’s safe to say that a Higher AOV = Higher LTV = More budget flexibility for CAC.
These are crucial points, especially when you want to scale your budget. If your AOV is too low, even the best-performing ads might not justify their cost.
But when AOV rises, your entire acquisition funnel becomes more efficient, and your growth potential expands.
If your LTV:CAC ratio improves, your entire business model gets healthier and your campaigns get more scalable.
3. It Directly Impacts Profitability
If your fixed costs stay the same and your AOV increases, your profit margins go up.
Higher order values reduce the relative impact of those fixed costs per transaction. You end up making more from each sale without needing to increase volume.
In short, AOV is one of the most controllable, impactful levers in ecommerce and SaaS. And unlike traffic or conversion rate, it’s often under-optimized.
How to Calculate Average Order Value
Fortunately, calculating Average Order Value (AOV) requires a simple formula like so:
AOV = Total Revenue ÷ Number of Orders
Let’s say you’re running a SaaS platform like Notion, and over the past month, you earned $150,000 in revenue from 2,000 paid account activations. Your AOV would be
AOV = $150,000 ÷ 2,000 = $75
That means each new customer brought in an average of $75 in revenue. Whether they signed up for the annual plan, added extra users, or opted into premium features like AI tools.
A Few Nuances You Should Know
While the formula is simple, there are a few details that can give off a false impression of your AOV if you’re not careful:
- Refunds: Some SaaS businesses exclude churned users or refunds from AOV to keep data clean.
- Taxes & Add-ons: Should you include VAT or one-time service fees? If you’re aiming to measure product value, you might want to exclude these.
- Discounts: Always base AOV on actual revenue received after any promos or coupons.
What’s “right” really depends on your goals. For a product-led SaaS like Notion, it’s smart to count upgrade revenue from features or team add-ons. Just skip taxes and refunds for a cleaner AOV.
Tools That Track AOV Automatically
Most e-commerce platforms and analytics tools calculate AOV for you. Some of the most popular ones include:
- Stripe: You can segment by customer plan and track revenue per order/subscription.
- ChartMogul: Offers AOV tracking that analyzes user behavior for SaaS companies.
- Google Analytics: Under e-commerce reports, you’ll find AOV as “Revenue per Transaction.”
- Shopify: It’s right there in your Analytics dashboard when you’re running an e-commerce.
- BigCommerce, WooCommerce, and Klaviyo also offer built-in or app-based AOV tracking.
If you’re serious about optimization, consider segmenting AOV by traffic source, campaign, or even product category to uncover hidden growth opportunities.
Best Practices to Increase AOV
If boosting AOV feels like a mystery, you’re not alone. The good news is, you don’t need to overhaul your entire business model.
A few proven tactics can meaningfully increase your average order value, and they work across e-commerce, SaaS, and marketplaces.
1. Upselling
Encourage users to upgrade by offering premium versions of your product or service. For example, SaaS tools like Canva gently prompt users to try Pro features mid-workflow.
This in-context upsell works because it adds immediate value without disrupting the user experience.
2. Cross-Selling
Suggest related items or services that complement the original purchase. Think of how Amazon shows “frequently bought together” items.
In SaaS, this could be recommending integration add-ons or feature packs during checkout.
3. Tiered Pricing
Introduce pricing thresholds or volume discounts to incentivize larger purchases. A platform like Slack charges per user but offers better value at higher tiers, encouraging companies to onboard entire teams at once.
4. Free Shipping Thresholds
In ecommerce, offering free shipping for orders over a certain amount is one of the oldest (and most effective) AOV tactics. Customers often add extra items just to avoid shipping fees.
5. Limited-Time Bundles
Use urgency to drive bigger carts. Whether it’s a 3-for-2 bundle or a special promo for annual plans, limited-time offers encourage customers to spend more now rather than later.
6. Post-Purchase Add-Ons
Don’t forget the thank-you page! Offering an extra item or upgrade after checkout can increase order value without disrupting the initial conversion.
Tools like ReConvert or OneClickUpsell make this easy for e-commerce stores. They integrate seamlessly with Shopify and let you customize post-purchase offers based on customer behavior, boosting AOV without hurting UX.
AOV Optimization Strategies by Business Type
While the core concept of increasing AOV is universal, the execution varies depending on your business model. What works for a DTC brand might not suit a SaaS setup.
Let’s break it down with examples and sources:
DTC Brands
Direct-to-consumer stores thrive on product discovery. To increase AOV here, focus on:
- Personalized Product Recommendations: Beauty brand Sephora utilizes AI to analyze customer preferences and provide personalized product suggestions. It enhances the shopping experience and encourages higher spending.
- Bundling: Allbirds offers curated sock bundles, such as the “Anytime Sock Bundle,” where customers receive discounts when purchasing multiple pairs, effectively increasing the average order value.
- Lifestyle Imagery: Glossier leverages user-generated content (UGC) by encouraging customers to share their product experiences on social media, fostering a sense of community and promoting additional purchases.
SaaS or B2B Platforms
In SaaS, it’s all about perceived value. Some effective strategies include
- Feature Gating: Notion offers advanced features like team collaboration tools and AI functionalities in its paid plans, incentivizing users to upgrade for enhanced capabilities.
- User-Based Pricing: Slack employs a per-user pricing model, encouraging organizations to onboard entire teams, thereby increasing the overall order value.
- Add-On Services: HubSpot provides various add-ons, such as additional marketing tools and integrations, allowing businesses to customize their packages and increase their spending.
Marketplaces
If you’re running a platform like Etsy or Airbnb, your AOV strategy focuses on building bigger carts or bookings:
- Cart-Building Incentives: Etsy offers free shipping guarantees on orders over $35, motivating customers to add more items to their carts to qualify for the benefit.
- Curated Collections: Amazon creates themed collections, such as the “Back to School Shop”, grouping related products to encourage customers to purchase multiple items.
- Time-Based Promotions: Booking.com runs “Last Minute Deals.” It offers discounts on bookings made shortly before the travel date, prompting customers to make quicker and potentially larger purchases.
Aligning your AOV strategy with your business model ensures that you’re implementing tactics that resonate with your customers and drive meaningful results.
Measuring Impact & Tracking Progress
So, you’ve launched some AOV-boosting tactics. Now what?
Measuring their impact isn’t just about watching your average order value tick up. You need to track it holistically to understand what’s truly driving results and where to iterate.
Key KPIs to Monitor
Here are the metrics that give you the full picture:
- Average Cart Size: A rising AOV should correlate with bigger carts (or higher-tier packages in SaaS).
- Conversion Rate: Don’t sacrifice conversions just to increase order size. Keep an eye on how changes affect your baseline.
- Revenue per Session: A higher AOV means more revenue per visit, but it must scale with traffic to show real impact.
- Customer Lifetime Value (LTV): Monitor whether short-term increases in AOV are contributing to longer-term value.
Run A/B Tests
Not all AOV tactics are created equal. Use A/B or multivariate testing to evaluate:
- Whether product bundles outperform individual listings.
- If upsells perform better during checkout or post-purchase.
- The impact of free shipping thresholds on cart abandonment.
Tools like Google Optimize, Optimizely, and VWO can help run these experiments without bogging down your dev team.
Segment by Channel or Cohort
Want deeper insight? Break down your AOV by:
- Acquisition Channel: Compare organic, paid, affiliate, and email traffic.
- Customer Cohorts: First-time buyers vs. repeat purchasers, or free vs. premium users.
- Geographic Region: In some markets, users may be more price-sensitive or bundle-happy.
This lets you tailor AOV strategies to high-performing segments instead of applying a blanket approach.
Common AOV Mistakes to Avoid
It’s easy to go overboard or misfire entirely when you’re chasing higher average order value. We’ve seen brands make these mistakes, and they can backfire fast. Here’s what to watch out for:
1. Pushing Upsells Too Early
You’ve probably seen it: a user clicks “Add to Cart,” and bam! They’re hit with five upsell popups before even reaching the checkout page.
It’s overwhelming for your users. So, when you introduce upsells too soon, especially before trust is built, you risk tanking conversions. That’s why timing matters.
Pro tip: Wait until after the user has committed (like on the thank-you page or during checkout) to introduce high-value add-ons.
2. Ignoring Mobile UX
More than 70% of e-commerce traffic now comes from mobile devices, and it’s projected to hit 88% by 2027.
Yet, many upsell strategies are still designed with a desktop-first mindset. If your mobile checkout flow is clunky or cluttered with popups and cross-sells, you’re not increasing AOV. You’re losing sales.
Get a quick win by optimizing upsells for mobile-first experiences with clean CTAs, seamless layouts, and touch-friendly navigation.
3. Misaligned Promotions
Throwing in random discounts or unrelated product bundles might encourage AOV, but it also confuses users. If your offers don’t match customer intent, you create friction and reduce perceived value.
Example: A B2B SaaS company offering unrelated webinar access as an upsell to a CRM plan is clearly making an off-brand offer and is off-target.
Focus on relevance. The best AOV strategies enhance, not disrupt the user journey
Final Thoughts: Start Small, Optimize Often
Optimizing average order value (AOV) is a continuous process that evolves with your business.
A simple starting point works best. Test one tactic like shipping thresholds and track how it impacts revenue and conversion.
Pair AOV growth with smarter customer acquisition cost (CAC) strategies. This combination will likely boost profit margins and make your scaling efforts more efficient.
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