AOV is calculated by dividing total revenue by number of orders. This metric helps:
- Determine pricing strategies
- Set free shipping thresholds
- Plan inventory investments
- Guide marketing budget allocationFor example, if your monthly revenue is $100,000 from 1,000 orders, your AOV is $100. Increasing AOV through bundling, upsells, or cross-sells directly impacts profitability without requiring additional customer acquisition costs.