Enter the total revenue generated from orders and the total number of orders into the calculator to determine the average order value (AOV).
The following formula is used to calculate an average order value.
AOV = R / O
- Where AOV is the average order value ($/order)
- R is the total revenue generated from all orders within a time period ($)
- #O is the total number of orders in the period
To calculate average order value, divide the total revenue generated by the total number of orders.
What is AOV?
AOV (average order value), is a financial term used to describe the average revenue generated per order or sale.
Why does AOV matter?
AOV is a key metric in understanding a business’s overall performance through all product offerings. This allows a business to compare the average order value to those of individual products to determine which ones are over-performing and which ones are under-performing.
How to calculate AOV?
- First, determine the total revenue generated through all orders in a time period.
For this example, the time period is 1 year and the total revenue generated from all orders in that year comes to be $60,000.00.
- Next, determine the total number of orders in the same time period.
Over the past year, this business made a total of 4,000 orders.
- Finally, calculate the AOV.
Using the formula above, the average order value is found to be:
AOV = R/#O
AOV = $60,000/4000
AOV = $15 per order