How do I increase average order value?

1 Know your number the way Shopify calculates it

Shopify calculates average order value as gross sales minus discounts, divided by the number of orders. That implies something often missed: a discount lowers order value at first. It only raises it if customers add more than the discount costs.

Compare against your own past numbers, not industry figures. The averages floating around online change month to month and rarely disclose a method.

2 Set thresholds from your own order data

You'll find a rule of thumb like "30% above average" in many blogs, but no source for it. A better approach: export your orders from the last few months and count how many fall into each $5 band. The threshold belongs just above a point where many orders cluster.

Then check whether a typical add-on closes the gap. If carts fall $8 short on average and your cheapest matching product costs $15, the threshold becomes a hurdle.

3 Show how much is left, in two places

A threshold only works if customers know it. In Baymard's tests, 27% of users missed a free-shipping notice that sat only in a banner at the top of the page. Baymard and the Nielsen Norman Group therefore advise stating the condition right by the buy button and telling shoppers in the cart exactly how much is left.

4 Give every cart a next goal

A single threshold only helps orders just below it. Tiers like 5% off over $50 and 10% off over $80 still give a cart that has passed the first tier a reason to add one more item.

In Shopify you can recreate tiers as several automatic discounts that don't combine with each other, so the best one applies. Each tier takes one of the 25 automatic-discount slots, though, and checkout doesn't tell the customer about the next tier.

5 Reward quantity for consumables

For products customers need regularly, a volume discount is the direct route: 10% off when you buy three or more. "More for the same money" can work better than a percentage. In a field test, "50% more free" sold far more than "35% off", even though the discount was worth slightly more. The researchers' explanation: shoppers compare the numbers, not the value behind them.

Is a volume discount worth it? works out how many more units you need to sell.

6 Offer add-ons at several price points

The Nielsen Norman Group recommends suggesting products at different prices on the way to a threshold, so shoppers can reach it without spending more than necessary. A $9 accessory closes an $8 gap, a $120 jacket doesn't.

Keep it relevant. According to Baymard, 52% of the stores studied showed cart suggestions that were completely unrelated or based only on what others had bought.

7 Apply offers automatically, not by code

A code the customer has to hunt for can send them out of checkout to coupon sites. Baymard advises applying discounts automatically wherever possible; according to its benchmark, 83% of large stores don't. In Shopify that's one choice: automatic discount instead of discount code.

8 Factor in shipping and returns

A higher order value is only a win if you keep more profit afterward. Two studies with real online retailers urge caution: free shipping above a threshold brought significantly more sales but was unprofitable for the retailer studied. In the second study, returns rose along with free shipping.

So before and after a promotion, compare gross profit per order after returns. Order value alone doesn't tell you enough.