Average order value is the average amount spent by a customer per transaction, calculated by dividing total revenue by the number of orders.

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Why is Average order value important?

Average order value helps businesses measure the effectiveness of their pricing strategies and marketing efforts, allowing them to optimize for higher revenue per customer.

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An Easy Way To Understand Average Order Value

Calculate the average amount spent per transaction. By dividing your total revenue by the number of orders, you can determine how much customers typically spend, helping you optimize pricing and marketing strategies.

3 Ways To Increase AOV

1. Bundle products or services: Offer discounted bundles or packages that encourage customers to purchase multiple items in a single transaction. This not only increases AOV but also provides value to the customer.

2. Implement upselling and cross-selling strategies: Suggest complementary or higher-value products during the checkout process or on product pages. Use phrases like "frequently bought together" or "customers also viewed" to encourage additional purchases.

3. Offer free shipping thresholds: Set a minimum order value for customers to qualify for free shipping. This motivates customers to add more items to their cart to reach the threshold, increasing AOV while also providing a desirable incentive.

At Kosme Aesthetics, Wayne added a $900/month tier on top of the $380/month tier to increase the AOV.