Glossary - Margin and unit economics

Average order value (AOV)

Average order value (AOV) is total revenue divided by the number of orders over a period - the average amount spent per checkout. It is calculated on a consistent revenue basis, and ecommerce operators use it to size how much contribution each order can carry and to judge pricing, bundling and threshold moves.

AOV = Total revenue ÷ number of orders

Variable	What it means
Total revenue	Revenue over the period on a consistent basis - pick one treatment of discounts, shipping income, tax and returns, and hold it everywhere.
Number of orders	Orders placed in the same period, on the same basis (for example, excluding fully refunded orders if revenue excludes them).

Worked example

Monthly revenueA$115,320

Orders961

AOV = 115,320 ÷ 961A$120.00

Contribution per order at 23% contribution marginA$27.60

Lift AOV to A$135 at the same margin structureA$31.05 per order

Example numbers, and the last line is the catch: an AOV lift only helps if the margin structure holds. A discount-funded lift usually breaks exactly that assumption.

What is a good average order value?

There is no good AOV in the abstract - it depends on your category, price architecture and margin structure, and it is a revenue metric, not a profit one. A high AOV on thin margin can contribute less per order than a modest AOV on strong margin. The better question is contribution per order: what each checkout leaves after variable costs. And because discounting is the most common way stores chase AOV, run the free discount impact calculator first - it shows what a discount does to contribution before you spend it.

Average order value vs related metrics

Metric	What it measures	How it differs from AOV
Contribution margin	Revenue minus variable costs.	AOV is the top of the order's math; contribution margin is what the order actually keeps.
Unit economics	The profit and loss of one order, customer or SKU.	AOV is one input - unit economics steps the whole order down to CM3.
Customer lifetime value (LTV)	Contribution a customer generates over their lifetime.	LTV = AOV × purchase frequency × customer lifespan × CM% - AOV is one of four levers.
Repeat purchase rate	Share of customers who buy again.	AOV sizes each order; repeat rate counts how many orders a customer gives you.

Common mistakes

Chasing AOV with discounts. A discount that lifts the basket can give away more margin than the bigger basket adds - check contribution, not the AOV line.
Measuring on gross revenue. AOV before discounts and returns overstates what an order is worth; keep the basis consistent with your margin math.
Reading AOV as profit. Two stores with identical AOV can have opposite unit economics - AOV says nothing about what the order kept.
Ignoring mix effects. AOV can rise simply because cheaper SKUs stopped selling - which may be bad news wearing a good metric.
Comparing across channels without margin context. A higher-AOV channel with heavier shipping and fees can contribute less per order.

Average order value FAQ

Conventions differ - a common basis is product revenue net of discounts, excluding tax. What matters is choosing one basis and using it everywhere, including in your contribution margin math.

No - only if the added basket carries contribution. A discount-funded AOV lift can leave less margin per order than before, which is why AOV moves should be judged at CM3, not at the revenue line.

Prefer levers that add contribution rather than give it away: bundles built from high-margin SKUs, free-shipping thresholds set above the current AOV, and price architecture tests - rather than sitewide discounts.

Contribution margin Unit economics Customer lifetime value (LTV) Repeat purchase rate Break-even point Discount impact calculator All 14 free tools →

Blufire S2 Unit Economics shows what every order keeps, not just what it grossed - per order, customer and SKU in the Profitability Cube, with the CM waterfall & bridge doing the step-down. The Math teaches the full method free.

Updated July 2026