Average Order Value AOV
On average, how many dollars a customer spends each time they check out.
The fork, why two teams get different numbers
Everyone agrees it is dollars ÷ orders; nobody agrees on which dollars. The
marketing team computes AOV on GROSS merchandise (list price before returns,
often including shipping and tax) because that is what the ad platform and the
storefront report out of the box. Finance computes it on NET sales (after
returns, discounts, and allowances, excluding shipping revenue and sales tax)
because that is what ties to the P&L. On the same week, a promo-heavy DTC brand
can show a $92 marketing AOV and a $61 finance AOV for the identical orders, both are honestly labeled "AOV" and the two teams argue past each other.
The trap
Shipping and tax silently inflate AOV: a free-shipping-threshold nudge that lifts "AOV" from $48 to $55 may be lifting the shipping line, not the goods.
- The full trap, worked on a real export
- Every formula variant, spelled out
- The reconciliation anchor, what to tie it to and when to refuse
Reference: Retail/e-commerce reporting convention · ASC 606 for the net-sales basis (reference)