Average order value is the typical ticket. Divide the period’s revenue by the number of completed orders.
SBA’s marketing and sales pages tell you to compare marketing costs with the revenue those efforts generate, and to keep a path from a visitor to a completed sale. The SEC’s beginners’ guide to financial statements treats sales as the top line of an income statement. Average order value is that sales line per order.
The average order value calculator uses three boxes:
Average order value = revenue ÷ orders
Items per order = items sold ÷ orders
Revenue per item = revenue ÷ items sold
Items sold can be 0. The ticket still calculates. Revenue per item then waits for a count.
Visitors times a conversion rate times this ticket is the conversion funnel calculator. The funnel post starts from an $80 order. Price versus cost is the markup and margin post. Two package sizes of the same product are the unit price post.
These examples use the formula on one period’s revenue and orders.
Fig 1
Revenue, orders, and items
The ticket is revenue divided by orders
Divide revenue by orders for the ticket. Divide items by orders for the basket. Divide revenue by items for the item average.
What belongs in revenue
Pick one revenue rule and keep it. Merchandise only is a different ticket from merchandise plus shipping plus tax. Example 7 runs both on the same 400 orders.
Refunds belong out of revenue and out of the order count together. Example 5 leaves the refund dollars in and drops the orders, which inflates the ticket.
A few wholesale invoices in the same total will lift the average above any typical retail checkout. Example 6 splits the channels, then adds them back.
Example 1: the calculator defaults
Inputs:
- revenue: $48,000
- orders: 400
- items sold: 1,200
Average order value: 48,000 ÷ 400 = $120.00
Items per order: 1,200 ÷ 400 = 3
Revenue per item: 48,000 ÷ 1,200 = $40.00
Calculator result
Average order value
- Revenue in the period
- $48,000.00
- Orders in the period
- 400 orders
- Items sold in the period
- 1200 items
$120.00
average order value
- Items per order
- 3
- Revenue per item
- $40.00
- Orders
- 400
The $120 is the checkout, not the shelf price. Three items at $40 each land on the same $120. A $120 ticket with one item would be a different mix. This one is three items.
Example 2: a boutique with fewer, larger tickets
Inputs: revenue $36,000, orders 80, items 96.
Average order value: 36,000 ÷ 80 = $450.00
Items per order: 96 ÷ 80 = 1.2
Revenue per item: 36,000 ÷ 96 = $375.00
Calculator result
Average order value
- Revenue in the period
- $36,000.00
- Orders in the period
- 80 orders
- Items sold in the period
- 96 items
$450.00
average order value
- Items per order
- 1.2
- Revenue per item
- $375.00
- Orders
- 80
Revenue is $12,000 below Example 1. The ticket is 450 ÷ 120 = 3.75 times the default, because 80 orders did the work of a much larger count. Most tickets hold one item. The 0.2 past 1 is the extra piece on some of them.
Example 3: a coffee counter
Inputs: revenue $22,500, orders 1,500, items 4,500.
Average order value: 22,500 ÷ 1,500 = $15.00
Items per order: 4,500 ÷ 1,500 = 3
Revenue per item: 22,500 ÷ 4,500 = $5.00
Same three items per order as Example 1. The item price is $5 instead of $40, so the ticket is $15 instead of $120. 1,500 orders at $15 is less revenue than 400 orders at $120: 22,500 against 48,000.
Fig 2 · 1/3
Three tickets from three shops
Same formula. Revenue and order count change together.
Average order value
Default
$120
Boutique
$450
Coffee
$15
The default month is a $120 ticket.
The boutique is $450. The coffee counter is $15.
Example 4: what if revenue rises and orders stay put
Hold Example 1’s 400 orders and 1,200 items. Change revenue from $48,000 to $60,000.
Average order value: 60,000 ÷ 400 = $150.00
Items per order: 1,200 ÷ 400 = 3
Revenue per item: 60,000 ÷ 1,200 = $50.00
The extra revenue is 60,000 − 48,000 = $12,000.00. Spread over the same 400 orders, that is 12,000 ÷ 400 = $30.00 on the ticket, from $120 to $150. Per item, $40 becomes $50. The basket size did not change. The price inside it did.
If the extra $12,000 had come from 100 new orders at the old $120 ticket, orders would be 500 and the average would stay $120. 60,000 ÷ 500 = 120. The average moves when revenue and orders do not move together.
Example 5: the mistake of leaving refunds in revenue
Start from Example 1. Suppose 30 orders come back, $3,600 of refunds, and 90 items. The returned tickets were the same $120 average: 3,600 ÷ 30 = 120. The returned items were the same three per order: 90 ÷ 30 = 3.
Correct inputs: revenue 48,000 − 3,600 = $44,400, orders 400 − 30 = 370, items 1,200 − 90 = 1,110.
Average order value: 44,400 ÷ 370 = $120.00
Items per order: 1,110 ÷ 370 = 3
Revenue per item: 44,400 ÷ 1,110 = $40.00
The ticket does not move, because the refunds were at the same average as the rest.
Now the slip. Drop the 30 orders and the 90 items, and leave the $3,600 in revenue. Inputs: revenue $48,000, orders 370, items 1,110.
Average order value: 48,000 ÷ 370 = 129.7297, shown as $129.73
Items per order: 1,110 ÷ 370 = 3
Revenue per item: 48,000 ÷ 1,110 = 43.2432, shown as $43.24
Calculator result
Average order value
- Revenue in the period
- $48,000.00
- Orders in the period
- 370 orders
- Items sold in the period
- 1110 items
$129.73
average order value
- Items per order
- 3
- Revenue per item
- $43.24
- Orders
- 370
The basket still says 3. The ticket is high by 129.73 − 120 = $9.73, which is the $3,600 still sitting on 370 orders: 3,600 ÷ 370 = 9.7297. Take the refunds out of revenue when you take those orders out of the count.
Example 6: wholesale and retail in one total
Retail, same as Example 1: revenue $48,000, orders 400, items 1,200. Ticket $120.00, 3 items, $40.00 each.
Wholesale: revenue $72,000, orders 12, items 480.
Wholesale ticket: 72,000 ÷ 12 = $6,000.00
Items per wholesale order: 480 ÷ 12 = 40
Revenue per wholesale item: 72,000 ÷ 480 = $150.00
Add them: revenue 48,000 + 72,000 = $120,000, orders 400 + 12 = 412, items 1,200 + 480 = 1,680.
Combined ticket: 120,000 ÷ 412 = 291.2621, shown as $291.26
Items per order: 1,680 ÷ 412 = 4.0777, shown as 4.08
Revenue per item: 120,000 ÷ 1,680 = 71.4286, shown as $71.43
The $291.26 is the blend. The retail ticket is still $120. Twelve wholesale invoices pulled the combined average up. The item average falls from the wholesale $150 to $71.43 because the 1,200 retail items at $40 dominate the count. Split the channels when you want the retail checkout on its own.
Example 7: shipping and tax left in the total
Merchandise revenue stays $48,000 on 400 orders and 1,200 items. That ticket is still $120.00.
Add shipping of $4,800 and tax of $3,840. Cash revenue is 48,000 + 4,800 + 3,840 = $56,640.
Cash per order: 56,640 ÷ 400 = $141.60
Items per order: still 3
Revenue per item, with shipping and tax in the numerator: 56,640 ÷ 1,200 = $47.20
Shipping per order is 4,800 ÷ 400 = $12.00. Tax per order is 3,840 ÷ 400 = $9.60. Together that is 141.60 − 120 = $21.60 on top of the merchandise.
Fig 3 · 1/3
What sits inside the $141.60 checkout
400 orders. Shipping $4,800. Tax $3,840.
Merchandise
$120.00
Shipping
$12.00
Tax
$9.60
Merchandise is $120 of the $141.60.
Shipping is $12. Tax is $9.60.
For the merchandise ticket, use $48,000. For cash per checkout, use $56,640. Items per order stays 3 either way. Revenue per item shows the rule you picked: $40.00 against $47.20.
Example 8: one quiet week
Inputs: revenue $6,240, orders 48, items 144.
Average order value: 6,240 ÷ 48 = $130.00
Items per order: 144 ÷ 48 = 3
Revenue per item: 6,240 ÷ 144 = 43.333, shown as $43.33
The week is small next to Example 1’s month. The shape is the same three items. The item price is $3.33 higher, so the ticket is $10 higher: 130 − 120 = 10. A short period is still a valid input. Label it as a week when you compare it with a month, or the $6,240 will look like a collapse in sales.
Example 9: one item per order, then a bundle, same revenue
Single-item shop. Inputs: revenue $18,000, orders 200, items 200.
Average order value: 18,000 ÷ 200 = $90.00
Items per order: 200 ÷ 200 = 1
Revenue per item: 18,000 ÷ 200 = $90.00
The ticket and the item price match, because every order is one item.
Bundle shop, same revenue. Inputs: revenue $18,000, orders 100, items 400.
Average order value: 18,000 ÷ 100 = $180.00
Items per order: 400 ÷ 100 = 4
Revenue per item: 18,000 ÷ 400 = $45.00
Revenue did not change. Orders fell by half, so the ticket doubled: 180 ÷ 90 = 2. Items doubled from 200 to 400, so the item price halved: 45 ÷ 90 = 0.5. A higher average order value can be a bigger basket at a lower item price. Read the items line before you call it a price increase.
Example 10: one order, and a blank items box
One contract closes the period. Inputs: revenue $15,000, orders 1, items 40.
Average order value: 15,000 ÷ 1 = $15,000.00
Items per order: 40 ÷ 1 = 40
Revenue per item: 15,000 ÷ 40 = $375.00
The average of one order is that order. Put it next to Example 1 and the $15,000 ticket is 15,000 ÷ 120 = 125 times the $120 month. If that contract is not the business you are measuring, keep it out of the order count.
Items box left at zero. Inputs: revenue $9,600, orders 80, items 0.
Average order value: 9,600 ÷ 80 = $120.00
Items per order: 0 ÷ 80 = 0
Revenue per item: the page reports Need items sold
The ticket matches Example 1. You get no item price until the items box is filled. Type 0 on purpose when you only want the order average. Type the real count when you want the other two lines.
Six months of the same shop
Each month uses the same division. The line is that month’s ticket.
| Month | Revenue | Orders | Items | Ticket | Items per order | Per item |
|---|---|---|---|---|---|---|
| 1 | $42,000 | 400 | 1,100 | $105.00 | 2.75 | $38.18 |
| 2 | $45,000 | 420 | 1,260 | $107.14 | 3 | $35.71 |
| 3 | $48,000 | 400 | 1,200 | $120.00 | 3 | $40.00 |
| 4 | $51,000 | 390 | 1,170 | $130.77 | 3 | $43.59 |
| 5 | $54,000 | 450 | 1,350 | $120.00 | 3 | $40.00 |
| 6 | $60,000 | 400 | 1,200 | $150.00 | 3 | $50.00 |
Month 1: 42,000 ÷ 400 = 105. 1,100 ÷ 400 = 2.75. 42,000 ÷ 1,100 = 38.1818, shown as $38.18.
Month 2: 45,000 ÷ 420 = 107.1429, shown as $107.14. Items are 3. 45,000 ÷ 1,260 = 35.7143, shown as $35.71.
Month 4: 51,000 ÷ 390 = 130.7692, shown as $130.77. 51,000 ÷ 1,170 = 43.5897, shown as $43.59.
Month 5 matches month 3’s $120 ticket with 50 more orders. Revenue rose by 54,000 − 48,000 = $6,000, and 6,000 ÷ 50 = $120, so the average held. Month 6 is Example 4.
Fig 4 · 1/6
Ticket across six months
Each point is that month's revenue divided by that month's orders.
Average order value
- Ticket
| Point | Ticket |
|---|---|
| M1 | $105 |
| M2 | $107 |
| M3 | $120 |
| M4 | $131 |
| M5 | $120 |
| M6 | $150 |
Month 1 opens at $105.
Month 6 closes at $150. Month 5 had already dipped back to $120.
The ten results side by side
| Example | Revenue | Orders | Items | Ticket | Items / order | Per item |
|---|---|---|---|---|---|---|
| 1. Defaults | $48,000 | 400 | 1,200 | $120.00 | 3 | $40.00 |
| 2. Boutique | $36,000 | 80 | 96 | $450.00 | 1.2 | $375.00 |
| 3. Coffee | $22,500 | 1,500 | 4,500 | $15.00 | 3 | $5.00 |
| 4. Revenue up | $60,000 | 400 | 1,200 | $150.00 | 3 | $50.00 |
| 5. Refunds left in | $48,000 | 370 | 1,110 | $129.73 | 3 | $43.24 |
| 5, corrected | $44,400 | 370 | 1,110 | $120.00 | 3 | $40.00 |
| 6. Channels combined | $120,000 | 412 | 1,680 | $291.26 | 4.08 | $71.43 |
| 6, wholesale alone | $72,000 | 12 | 480 | $6,000.00 | 40 | $150.00 |
| 7. Shipping and tax | $56,640 | 400 | 1,200 | $141.60 | 3 | $47.20 |
| 8. One week | $6,240 | 48 | 144 | $130.00 | 3 | $43.33 |
| 9. One item | $18,000 | 200 | 200 | $90.00 | 1 | $90.00 |
| 9. Bundle | $18,000 | 100 | 400 | $180.00 | 4 | $45.00 |
| 10. One order | $15,000 | 1 | 40 | $15,000.00 | 40 | $375.00 |
Example 5 is the refund slip. Example 6 is the mix slip. Example 7 is the shipping-and-tax choice. Run retail and wholesale as two periods when both are in the books. Then put the ticket you kept into the conversion funnel calculator if the next question is visitors times that order.