How to calculate AOV
AOV = Revenue ÷ Number of orders
Worked example
Last month your store had $48,000 in revenue from 600 orders.
AOV = $48,000 ÷ 600 = $80
Now suppose you add a bundle offer and AOV rises to $90 with the same 600 orders. Revenue becomes $54,000, an extra $6,000, without spending another dollar on ads.
Be consistent about what goes in:
- Exclude or include taxes and shipping the same way every time. Most stores calculate AOV on product revenue, excluding sales tax.
- Decide how to treat refunds. Using net revenue after refunds gives a truer picture.
- Watch for outliers. A few very large wholesale or B2B orders can inflate AOV. If they are unusual, analyze them separately.
How AOV affects your Google Ads economics
Higher AOV gives your campaigns more room in every metric:
| AOV | Gross profit at 40% margin | Break-even CPA | Max profitable CPC at 2% CR |
|---|
| $60 | $24 | $24 | $0.48 |
| $80 | $32 | $32 | $0.64 |
| $100 | $40 | $40 | $0.80 |
Each extra dollar of AOV raises how much you can afford to pay per click and per order. That lets you bid more competitively in Shopping auctions, win more impressions, and still stay profitable. See the full effect with the target CPA calculator and CPC calculator.
AOV also affects which bidding strategy fits. When order values vary a lot, Target ROAS in Shopping and Performance Max generally serves you better than Target CPA, because it weighs a large order more heavily than a small one.
What is a good AOV?
AOV depends almost entirely on what you sell. A store selling phone cases and one selling office chairs will have very different numbers, and neither is better. More useful questions are:
- Is your AOV rising or falling over time? Track it monthly.
- How does it compare to your cost per order? If acquiring an order costs nearly as much as the gross profit on it, AOV is the lever to pull.
- How does it differ by channel? Customers from email or branded search may spend more than customers from prospecting ads.
- How close is it to your free-shipping threshold? Many stores set the threshold a little above current AOV to nudge baskets up.
How to increase average order value
- Bundles. Group items commonly bought together at a modest discount. Bundles can also be listed as their own products in Merchant Center.
- Free-shipping thresholds set just above your current AOV.
- Cross-sells and upsells on product pages and in the cart: matching accessories, larger sizes, premium versions.
- Volume pricing such as "buy 2, save 10%" on consumables.
- Gift with purchase above a certain spend.
- Advertise higher-value products. Give your best-margin, higher-priced products enough budget in Shopping campaigns rather than letting cheap items absorb most of the spend.
Watch your margin as you do this. A bundle discount that raises AOV but cuts margin too far can leave you with less profit per order.