AOV
Paid MediaAlso: Average Order Value
Quick definition
AOV stands for average order value. It measures the average amount a customer spends per transaction, calculated as total revenue divided by total number of orders in a given period. AOV is used to understand revenue per transaction and to set acquisition cost targets.
Compare AOV against your CPA and gross margin together. AOV on its own tells you less than the ratio does.
How it varies across Australia
AOV varies substantially across Australian ecommerce categories. Fashion and homewares tend to sit in a different range from consumables or digital products. The more useful question is whether your AOV is moving relative to your own baseline, and whether it covers your CPA with enough margin left to run a business.
Explore order value patterns across Australian industries →What it actually means
AOV is a blunt instrument with a precise formula. Total revenue divided by total orders. Simple to calculate, easy to misread.
The number marketers usually want from AOV is a quick read on whether the business is healthy. Higher AOV means each transaction covers more of the overhead and acquisition cost. Lower AOV means you need volume to make the maths work. Both are valid business models. The problem starts when teams treat AOV as a health signal without asking what it cost to produce those orders.
A business with AOV of $200 and 30% gross margin is in better shape than a business with AOV of $300 and 10% gross margin. The higher AOV looks better until you price in what the product costs to make and ship.
AOV's real value is as a denominator. It sits inside LTV calculations, sets the ceiling on CPA targets, and tells you how far above the free-shipping threshold you need to push customers before the economics flip. Use it that way and it earns its place. Report it on its own and it's decoration.
AOV tells you the size of the order. It says nothing about whether that order was worth taking.
How to calculate it
AOV = Total revenue ÷ Number of orders
Worked example. Your store generated $84,000 in revenue last month from 420 orders. AOV = $84,000 ÷ 420 = $200. If your CPA is $40 and gross margin is 50%, each order produces $100 gross profit. Plenty of room. If gross margin is 15%, each order produces $30 gross profit and your CPA already eats it all.
The Australian context
Australian ecommerce carries structural costs that compress the spread between AOV and profit: GST collected and remitted, higher shipping costs relative to order value (especially outside capital cities), and payment processing in Australian dollars with local interchange rates. All of these mean an AOV that looks workable in a US benchmark comparison may sit much closer to the break-even point than it appears.
The other Australia-specific factor is free-shipping thresholds. Australian consumers are sensitive to shipping costs and many retailers have set thresholds that push AOV up without increasing gross profit per order, because the shipping discount eats the upsell gain. Check whether your free-shipping threshold is working for you or against you.
Where people get this wrong
Related terms
Common questions
How do I increase AOV without discounting?
The three main levers are bundling (grouping products at a small saving), upselling at checkout (showing a higher-value alternative), and free-shipping thresholds set just above your current AOV. Thresholds work well when the threshold is reachable with one additional small item. Set them too high and customers ignore them.
Is AOV the same as basket size?
Close but not identical. Basket size usually refers to the number of items per order. AOV is the revenue value of the order. High basket size with low-priced items can produce a low AOV. The two metrics are related but answer different questions.
How does AOV connect to ROAS targets?
ROAS (return on ad spend) targets are partly a function of AOV. Higher AOV gives you more revenue per conversion to work with, which means you can afford a lower ROAS threshold while still covering costs. If your AOV drops, your ROAS target needs to rise to compensate.
Should I track AOV by channel?
Yes. AOV often varies significantly by traffic source. Paid social typically drives lower AOV than search or email because the audience intent differs. Channel-level AOV tells you whether you're scaling the right customer mix or filling volume with low-value orders.
Keep exploring
About New Rebellion
New Rebellion is a marketing intelligence consultancy. We build tools, score Australian businesses on how their marketing actually performs, and publish Debrief every day. This dictionary is part of how we work in the open.
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