Which is more difficult: selling something to $20-1000 customers or $1,000-2000 customers? It all depends on the product. The idea behind the question is that you don’t have to sell as many products to increase your profit.

Profits will skyrocket if you keep your order count constant and increase your average order value.

What is the average order value?

The average order value (or AOV) refers to gross revenues. It does not take into account expenses. Your average order value would be $131.58 if you have $10,000 in sales and 76 orders. This is the formula:

Average order value = Gross sales divided by the number of orders

One thing you need to remember is the price difference between your products. The formula can be used if most of your products fall within the same price range.

Let’s say you have one product line that is priced at a standard price and another line of products that are boutique- or luxury-oriented at much higher rates. You might think about calculating the average order value for each product since you will likely use different strategies for each. This will allow you to measure your impact more accurately.

What is the importance of an average order value?

Business is more successful when there’s more money. Consider the benefits of a larger average order size for your business.

• Higher profits. Assuming that your expenses are relatively constant, each dollar you increase your order value by is pure profits.

• Increased inventory turnover. Selling inventory more quickly is always a good thing for your business. To keep your inventory from building up, you need to have a steady flow of products.

• Higher profitability. You’ll see a faster return on your investment if you have a higher AOV.

There are nine ways to increase the average order value

1. Raise your prices

This is the simplest and most overlooked way to make more per sale. You must be cautious. You should think carefully about which products you want to increase and how much. Depending on your business, loyal customers will notice the price increase and may not be happy.

Consider this: Let’s say you sell a $20 product and sell 100 products per month. This is $2,000 in revenue. Let’s say you raise the price to $22.95. You then get a few unhappy customers who move on to other products. After that, you sell only 90 units per month. Your revenue still rose to $2,065 even though you barely made a dent in your daily expenses.

If you take into account shipping and packaging expenses, having fewer orders will result in lower expenses. This is a great tip. Customers will stay with you if your products and services are good.

2. Effective ways to upsell

There are many ways to upsell, but the goal is to capitalize upon the positive customer experience and make them spend more.

These are some great upselling strategies:

• You can upsell a better-quality version of the product, such as the luxurious model or the deluxe edition.

• You can upsell a membership to get them to purchase a monthly subscription, and you’ll see monthly revenue.

• Get a discount on your thank you page by adding an upsell

Upsells can be offered while customers shop, at checkout, after payment has been made on the thank-you page, or in follow-up emails. You can try them all to find the one that works for you. Seven upsell-related extensions can help you increase your average order size.

3. Recommend Add-ons

You can add small extras to many products on the checkout page. These are usually only a few dollars. Even if you sell a lot of products, add-ons such as gift wrapping and discounted gift cards can be offered.

Many times, minor upgrades such as customizations, color preferences, or additional features can be made quickly and easily. This will make your customers happy. To be a good business, these add-ons don’t have to cost more.

If you have a $25 average order value and sell 500 products per month, $12,500 per month is possible. You can make $13,500 if you can raise that average to $27, just two dollars more.

The Product Extension allows you to easily add customization fields and drop-downs to your product pages. Customers can choose how they want to personalize their order and the price will change automatically based on what you have set.

4. Take advantage of product bundles

Many businesses sell products that are naturally connected. You probably sell complementary products, whether you are selling outdoor equipment, books, health supplements, or online courses.

You can create product bundles and sell them at a slightly lower cost than if the customer bought each one individually. You’re offering a deal to the customer, which will result in a larger scale and more inventory. Bundling your product with other popular products is a great way of offloading the backlog.

The Product Bundles extension allows you to offer anything from customized, pick-and-mix boxes (like chocolate-packed mixed packs) to assembled products (like drum kits that include multiple items). You can also add “frequently purchased together” recommendations to increase order value. 

5. You can sell personalized collections

These are similar in concept to product bundles but customers can choose and select the items they wish to include in their collection. You will usually set a minimum order price or a number of items.

Businesses that subscribe to a subscription model often find this approach is a natural fit. You could combine strategies to offer the subscription as an additional sale after customers have selected the items that they would like in their collection. 

6. Kits are a great way to sell products

A kit is similar to personalized collections in that it includes individual products which are then combined to make the final product. You could think of it as a “build-your-own” shed.

You can make these kits more customizable by including pieces beyond the standard components.

To make selling kits more straightforward, check out the composite products extension. This extension is similar to the Product Bundles extension but it’s a better option if customers want to combine multiple products with different variations. In our example, the buyer of a shed might choose a type of roof and a door style, as well as a wood finish to be used for the body.

7. Free shipping for orders above a certain value

Shipping is costly and everyone hates to pay for it. Instead of giving free shipping to everyone, limit it to orders above a certain amount. This is the best way to ensure that your order totals are higher than your average order value. You should consider how much shipping will cost you and then set the baseline amount above that.

Let’s say your order is $50 in size and shipping costs are $10. For orders over $75, offer free shipping This will encourage people to spend more to get past the hump. You’ll also be increasing your profits even if shipping costs are paid.

8. Discounts at higher thresholds

Offer a discount on all orders above a certain amount, similar to the free shipping offer. This amount should be higher than your average order value. If the purchase price exceeds $100, you can offer a $20 discount.

If someone is looking to spend $60 on a product, the idea of paying $20 less and getting $100 worth of the product will appeal to them. As with many other strategies, everyone wins.

You can also layer this approach. For orders over $250, receive a $30 discount Orders above $250 qualify for a $50 discount.

9. Offer a payment plan to pay a higher price

If they can afford it, some people might choose to buy premium versions at a higher price. PayPal has several buy-now, pay-later options that do all the heavy lifting. Customers can choose to pay in four equal installments or finance larger purchases using PayPal credit. Store owners can choose to receive the entire amount upfront. This reduces risk and encourages customers to add more items to their carts.

To set this up, use the PayPal checkout extension

You can increase revenue without finding new clients

It is not necessary to launch new products or engage in a marketing campaign to increase your store’s revenue. Increase the average order value for each sale to increase income and grow your revenue without adding any additional customers.

What’s the great news? The great news? Many winning combinations will benefit you and your customer. You’ll increase your profit and gain a loyal customer who will return time and again.