AOV calculator
Average order value on the definition your Shopify reports use, then what is left of that order once the goods, the shipping you absorb and the payment fee come out of it.
Verified August 22, 2026
Average order value
$80.00
$48,000 of sales across 600 orders
An average order is worth $80.00 and contributes $27.38 once the goods, the shipping you absorb and the card fee are paid.
- Margin on the goods
- $36.00
- Shipping you absorb
- −$6.00
- Card fee, 2.9% plus 30 cents
- −$2.62
- Contribution per order
- $27.38
- Contribution margin
- 34.2%
- Annual customer contribution
- $136.90
- Next $5 and $10 step up
- $85.00 / $90.00
Contribution margin is the number the CAC calculator asks for. The step up is arithmetic on your own average, not a recommendation. Whether a threshold there earns its margin is a test, not a calculation.
How average order value is calculated
Sales divided by orders. The argument is only ever about which sales figure goes on top. Shopify calculates average order value as gross sales minus discounts, divided by the number of orders, and works the example itself: $1,000 of sales less $200 of discounts across 10 orders is an $80 average order value. Gross sales there means product price times quantity, before taxes, shipping and discounts, so tax and shipping are never in the numerator to begin with. Post-order adjustments such as edits or exchanges are excluded too.
AOV = (gross sales − discounts) ÷ orders
(1,000 − 200) ÷ 10 = 80.00
48,000 ÷ 600 = 80.00
That definition changed on January 9, 2023. Shopify moved average order value onto gross sales minus discounts, so a figure you screenshotted before then is not the same measurement as the one in your dashboard now, and neither is a spreadsheet that has been running since. The report to read is "Average order value over time" in Shopify Analytics.
Pick one definition and hold it. Net sales, which takes discounts and sales reversals off gross sales, is a defensible numerator too, and it gives a lower number. What breaks a dashboard is one figure computed on gross sales this quarter and net sales last quarter, then read as a trend. The cost side of the same identity is worked out in the COGS calculator.
What an average order is actually worth
An $80.00 average order is not $80.00 of anything you can spend. Contribution per unit is the selling price minus the variable cost of that unit, and three costs come off before the number means anything: the goods, the shipping you absorb, and the fee on the payment. At a 45% margin on the goods, $6.00 of absorbed shipping, no tax or customer-paid shipping added at checkout, and Stripe's published 2.9% plus 30 cents, an $80.00 order leaves $27.38.
contribution = AOV × margin − shipping − fee
80.00 × 0.45 = 36.00
36.00 − 6.00 − 2.62 = 27.38
$44.00
Cost of the goods
$6.00
Shipping you absorb
$2.62
Payment fee
$27.38
Contribution
An $80.00 order, and what is still yours at the end of it.
The percentage fee applies to the whole card charge, while Shopify AOV leaves tax and shipping out. Add the average tax and customer-paid shipping collected at checkout above or the fee will be understated. With neither added, the fee is 3.28% of an $80.00 order and 5.9% of a $10.00 one, because 30 cents of it does not care how big the order is. The Stripe fee calculator shows the curve across order sizes.
Contribution per order is also the number that decides whether an acquisition is worth making. Put it against what a customer costs to win in the CAC calculator, and the question stops being whether the CAC is high and starts being how many orders it takes to cover it.
From AOV to annual customer contribution
AOV is what an order is worth. Multiply contribution per order by orders per customer per year and you get annual customer contribution. At $27.38 of contribution and five orders a year, a customer contributes $136.90 that year. Lifetime value needs one more fact: how many years, or total orders, the customer stays.
annual contribution = contribution per order × orders per customer per year
27.38 × 5 = 136.90
Each order leaves the same $27.38 of an $80.00 order. Five orders in the year leave $136.90.
Two caveats. The chain runs on contribution per order, so it is already net of the goods, the shipping you absorb and the card fee; run it on the $36.00 margin on the goods instead and the same customer reads $180.00, which is the number that flatters. And orders per customer per year is a backward-looking average that assumes next year's customers behave like last year's, which is a forecast wearing the clothes of a measurement.
Use the annual figure for one thing: deciding what you can pay to acquire this year. If a customer returns $136.90 of contribution over a year and costs $40.00 to win, that is 3.4 times the acquisition cost, and the payback question is how many orders it takes. Ratios of lifetime value to acquisition cost above 3 times come from David Skok's SaaS Metrics 2.0, and he wrote them about subscription software with near-zero marginal cost, not about a store that ships boxes.
Where a free-shipping threshold lands
A threshold only does anything if it sits above what people already spend. Below your average it is a discount you handed to orders that were coming anyway. So the arithmetic is simple: take your average order value and round it up to the next round step. At $80.00 that is $85.00 on a five-dollar step and $90.00 on a ten-dollar one.
next step = AOV rounded up to the next $5 or $10
80.00 → 85.00 on a five-dollar step
80.00 → 90.00 on a ten-dollar step
That is your number, not a rule. Nobody has published a dated primary figure for how far above an average a threshold should sit, and the answer depends on what you sell: a $6.00 add-on can close a $5.00 gap, while a catalog of $80.00 single items cannot. The cost side is knowable, though. Every order that crosses the line costs you the shipping you were charging for, so the gap has to carry more contribution than the shipping you gave away.
There is one pressure on average order value that no threshold fixes. When a listing on another marketplace uses your product photographs at a lower price, the customer comparing the two is not comparing shipping policies. Knockoff watches your catalog's photos across Amazon, Temu, eBay, Etsy, AliExpress, Walmart and the open web, confirms each match against the seller's own gallery, and hands you a finished case to approve. Run a scan and see which of your products are being copied today.
Common questions about AOV
How do you calculate average order value?
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Divide sales by the number of orders that produced them. Shopify calculates it as gross sales minus discounts, divided by number of orders, and gives the worked example of $1,000 of sales less $200 of discounts across 10 orders, which is an $80 average order value.
What is AOV and LTV?
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AOV is what an average order is worth. LTV is what a customer is worth across the entire relationship. Contribution per order times orders per customer per year gives annual customer contribution: an $80.00 order that contributes $27.38, five times in a year, is $136.90. True LTV needs the customer's total lifetime orders.
Does AOV include shipping and tax?
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No. Shopify's gross sales figure is product price times quantity, before taxes, shipping and discounts, and its average order value takes discounts off that. Post-order adjustments such as edits or exchanges are excluded as well.
How do I increase average order value?
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Sell more per order rather than more orders: bundles, volume pricing, a second product on the cart page, and a free-shipping threshold set above your current average. Every one of those raises the number that every other metric on your dashboard is divided by.
Sources
- Shopify Help Center, sales reports, for average order value as gross sales minus discounts divided by number of orders, the $1,000 less $200 across 10 orders example, the exclusion of post-order adjustments such as edits and exchanges, gross sales as product price times quantity before taxes, shipping and discounts, net sales as gross sales minus discounts and sales reversals, and the "Average order value over time" report
- Shopify changelog, January 9, 2023, for the date the average order value definition moved to gross sales minus discounts
- Shopify, break-even analysis, for contribution margin per unit as the average selling price minus the variable cost per unit
- stripe.com/pricing, US standard pricing, for the 2.9% plus 30 cent online card rate used as the payment fee example
- Stripe, collect taxes with PaymentIntents, for charging the grand total after tax and shipping rather than the product subtotal alone
- David Skok, SaaS Metrics 2.0, for the ratio above 3 times, stated there about SaaS businesses
Every figure on this page was read from the source beside it and verified August 22, 2026. The contribution, annual customer contribution and threshold arithmetic is arithmetic and belongs to nobody. No benchmark average order value is quoted here, because no dated primary source publishes one for ecommerce.
