What is Average Order Value (AOV)?

• A. The sum of individual order amounts divided by the number of orders.
• B. Total revenue divided by the number of customers.
• C. The number of orders.
• D. Gross profit per order.

Answer: (A)

AOV measures the average amount a customer spends per transaction. It’s calculated by taking the total revenue from all orders and dividing it by the number of orders (which is the same as summing all order values and dividing by how many orders occurred). This tells you, on average, how much each sale is worth, which helps evaluate pricing, promotions, and upsell strategies.

For example, if you have three orders worth 50, 75, and 100 dollars, total revenue is 225 and there were 3 orders, so AOV is 225 divided by 3, which equals 75 dollars per order.

AOV is different from total revenue (which is the overall money brought in) and from the number of orders (which measures how many transactions occurred). It’s also not gross profit per order, which would account for costs rather than revenue.