The short answer
Average order value, or AOV, is revenue divided by the number of orders on a stated basis. Higher AOV increases ROAS when order count and ad spend remain unchanged. Whether it improves contribution also depends on the costs of producing those larger orders.
Calculate AOV from consistent records
ROAS = AOV ÷ CPA per order
Illustrative inputs: 50 orders generate $4,000 of revenue from $1,000 of ad spend. AOV is $4,000 ÷ 50 = $80. CPA is $1,000 ÷ 50 = $20. ROAS is $80 ÷ $20 = 4×. The identity requires the same orders and revenue population in both components.
A bigger basket can leave less money
Suppose the original illustrative order has $45 in non-ad variable costs, leaving $80 − $45 − $20 = $15 after advertising. A bundle increases AOV to $100 but raises those costs to $70. If CPA stays at $20, ROAS rises to $100 ÷ $20 = 5× while contribution falls to $100 − $70 − $20 = $10. The stronger revenue ratio conceals weaker per-order economics.
Check the conversion trade-off
A minimum basket requirement or bundle can also change the number of buyers who complete checkout. Treat unchanged CPA as an assumption to test, not a fact. If fewer orders result from the same traffic and spend, CPA rises. Review total contribution, not only contribution per order, when volume changes.
Make refunds and order counts explicit
Decide whether refunded orders remain in the order count and whether revenue is net of refunds. Keep the definition stable across periods. Excluding refunded orders from the denominator while deducting their revenue from the numerator can create a different measure than the one you intended. Large orders can also pull the average upward, so inspect the order distribution before forecasting.
Plan a useful comparison
Track AOV, order rate, CPA, variable cost per order, and contribution after ads for the original and changed offer. Note changes in customer and product mix. AOV is a helpful component of the revenue equation; it is not a stand-alone objective that overrides the economics of what is being sold.
Evaluate a basket change
- Gather: Collect revenue, order counts, CPA and variable costs for each version of the offer.
- Produce: Compare total contribution as well as AOV and per-order contribution.
Decision boundary: A larger basket can reduce contribution if its extra costs exceed its extra revenue.
Next reading
Examples are illustrative, not client results or benchmarks. The calculations use the inputs shown; real-world decisions depend on your records and assumptions. Report a correction.