How to calculate average order value you can trust
The short answer
To calculate average order value, divide net revenue from customer orders by the number of customer orders for the period, here the fiscal year to date. Remove staff purchases, test transactions and internal orders before dividing, because they skew both totals. State which orders were excluded every time the figure is reported.
Average order value formula with exclusions
Why it matters
Staff orders, test transactions and internal transfers distort average order value, and they distort it differently each month. A clean, documented calculation gives finance and marketing the same number and lets you compare periods without second-guessing what is inside it.
The question to ask
Copy this into Lexi as written.
How to work it out
1. Set the period. Use your fiscal year to date, applying the fiscal calendar the finance team reports on.
2. Remove non-customer orders. Exclude staff purchases, test transactions, internal transfers and zero-value replacement orders.
3. Divide and document. Divide net revenue after discounts and returns by the remaining order count, and record each exclusion rule beside the result.
What the answer looks like
Illustrative output on sample data
Illustrative example: how Lexi answers this for a toy retailer's fiscal year to date. It calculates average order value (AOV), then removes staff purchases and test transactions.
- All orders: 412,000, $25.20 million. Raw AOV = $61.17.
- Staff purchases: 9,800 orders. Test transactions: 3,100 orders.
- Customer orders: 399,100, $24.85 million. Clean AOV = 24,850,000 ÷ 399,100 = $62.27.
What the data shows
Removing staff and test orders lifts AOV by about $1.10.
What it means
Both groups are small, cheap orders. Staff orders cluster in the last week of each quarter, so including them makes AOV dip at every quarter end.
What to do
Apply the same exclusions to every AOV report.
Would you like AOV by channel with the same exclusions?
Frequently asked questions
What is the average order value formula?
Average order value equals revenue divided by the number of orders for that period. For a clean figure, use net revenue after discounts and returns, and count only genuine customer orders, leaving out staff purchases, test transactions and internal orders. State the period and the exclusions with the result.
Should staff purchases count in average order value?
Not in the customer AOV. Staff orders are usually discounted, irregular and clustered around paydays or quarter ends, so they pull the average around without saying anything about customers. Report staff sales separately if they matter to finance, and keep them out of customer metrics.
How do test transactions end up in sales data?
Stores test new registers and payment terminals, ecommerce teams place test orders after site changes, and integrations create dummy records during setup. If they are not tagged, they flow into revenue and order counts. Tag test accounts and products at the source, and check for zero-value or one-cent orders.