What is AOV?
Average order value, or AOV, is the average revenue a single order generates, calculated as total revenue divided by the number of orders in a period.
Updated
AOV is one of only three levers on paid profitability — the others are conversion rate and cost per click — and it is usually the cheapest to move. Raising AOV by 15% improves your break-even ROAS immediately and permanently, without touching the ad account.
The practical routes are bundles that genuinely suit how the product is used, free-shipping thresholds set just above current AOV, volume pricing on consumables, and a considered post-purchase upsell. What rarely works is a blunt discount to hit a threshold: it lifts the order value on the invoice while cutting the gross profit the order contributes, which is the opposite of the point.
AOV also changes what your advertising has to do. At ₹800 a customer will buy from a single scroll. At ₹6,000 they will compare, leave, and come back days later, so the account needs retargeting and content that answers hesitation rather than one strong hook. When we look at a new account, AOV is the first number we ask for, because it determines almost everything about the structure that follows.
How AOV is calculated
AOV = Total revenue ÷ Number of orders
A worked example
A gifting brand takes ₹9,53,000 in revenue across 859 orders in a quarter.
- Total revenue = ₹9,53,000
- Orders = 859
- ₹9,53,000 ÷ 859 = ₹1,110
AOV = ₹1,110 per order.
Common mistakes
- Measuring AOV on gross revenue before returns. In apparel especially, returns can move real AOV by a wide margin.
- Chasing AOV with discounts on bundles that cut contribution margin more than they lift order value.
- Ignoring that a higher AOV usually means a longer consideration cycle, which changes what the ad has to do.
Want these numbers working for your brand?
A written audit in three working days, whether or not you hire us.