How to Increase Average Order Value Without Wrecking Margin

You increase average order value by giving shoppers a clear reason to add more to each order: a free shipping threshold, bundles, subscribe-and-save, and loyalty rewards. Hayes Media, an eCommerce growth agency whose retention practice runs email, SMS, loyalty programs, and subscribe-and-save, sets each of these from margin and judges every lever on gross profit per order, not on AOV alone.

This guide is for founders and marketing leads of Shopify and DTC brands. It covers the average order value formula, where Shopify reports it, how to set a free shipping threshold you can afford, and how bundles, subscribe-and-save, and loyalty tiers lift order value through your email and SMS flows. Every platform rule below is quoted from Shopify's or Klaviyo's own help pages, listed under Sources at the end.

What is average order value?

Average order value, or AOV, is the average amount a customer spends per order. The simple formula is revenue divided by number of orders. If your store took $30,000 from 500 orders last month, your AOV was $60.

Shopify's own definition is narrower, and it's worth knowing before you compare numbers. In its sales reports, Shopify says average order value "Equates to gross sales (excluding adjustments) - discounts (excluding adjustments) / number of orders." It defines gross sales as "product price x quantity (before taxes, shipping, discounts, and sales reversals)".

Two things follow from that. Shipping you charge doesn't count toward Shopify's AOV, and discounts pull it down. So a free shipping threshold can raise AOV, but the shipping fees you stop collecting won't show up in the same number.

Where do you find AOV in Shopify?

Shopify has a dedicated report for it. In Shopify's words, the Average order value over time report "displays how the average order value has changed over time." You can group it by day, week, month, and other time units, and compare date ranges.

The order reports carry the same metric with a plain definition: "The average dollar amount per order during the selected time period." If you sell bundles through the Shopify Bundles app, Shopify Analytics also gives you bundle reports, including total sales by bundle.

Pull AOV for the last few months before you change anything. You need a baseline, and you need it split by new and returning customers, because a blended number can hide a difference between the two groups.

Why judge AOV on gross profit per order?

Because AOV can rise while you make less money. A discount that gets people to spend more can cost more margin than the extra items bring in. A free shipping threshold set too low can mean you pay shipping on orders that barely cover it.

Shopify's sales report defines gross profit this way: "The total profit made on the product during the time period of the report. It's calculated by subtracting the product cost from the net sales." For order value decisions, take that one step further and subtract what you pay to ship and fulfil the order. That's gross profit per order, and it's the number each lever below has to improve.

It also feeds the bigger picture. Higher gross profit per order raises the lifetime gross profit each customer returns, which raises what you can afford to pay to acquire one. Our guide to eCommerce unit economics walks through that math, and how to improve your LTV to CAC ratio shows where order value fits in.

How do you set a free shipping threshold?

Set it from your margin and your shipping cost, then test it. Shopify lets you add a free shipping minimum to a shipping rate: "To offer free shipping, select Offer free shipping, and then enter the minimum amount for an order to qualify for free shipping." Shopify's own example is "orders of $50 USD or more are eligible for free shipping."

Shopify is also direct about the cost. Its shipping strategy page says "shipping is never actually free and you need to include a portion of your shipping fees into your products' prices." The same page notes you "can offer free shipping based on the cart value and increase your total order value."

Start from gross profit. Work out the gross profit on a typical order at the threshold, then subtract your average shipping cost. If what's left is lower than your gross profit per order today, the threshold is too low.

Set it just above your current AOV. A threshold far above what people spend asks too much. One just above it gives a shopper with a typical cart a reason to add one more item.

Make it easy to reach. Show the gap in the cart and suggest products priced to close it.

Message it in your flows. Put the threshold in your welcome series, browse and cart reminders, and campaigns. Our abandoned cart email examples show where an offer like this sits in a reminder.

How do bundles raise order value?

A bundle puts products that are used together into one offer, so the shopper buys two or three items in one order instead of one. It works best when the products genuinely belong together, like a refill with the device it fits, or a full routine instead of a single step.

Price bundles from gross profit, not from a round discount. A bundle that saves the customer money still needs to return more gross profit per order than the single item it replaces.

Email and SMS carry most of the bundle work. In an abandoned cart email, a bundle can replace the single item that was left behind. In a post-purchase flow, it suggests the product that completes what the customer just bought. Klaviyo's product feeds help here: "Product feeds are sets of products selected based on rules you set in Klaviyo. You can choose to include or exclude products from a feed based on category, price, stock level, and how your customers have engaged with your products." See our post-purchase email flow examples for where each message goes.

Does subscribe-and-save increase average order value?

Not always per order, and that's fine. A subscription discount can lower the value of each order. What it changes is how many orders a customer places and how predictable they are, which is why it belongs in a page about order value at all.

Shopify Subscriptions shows the levers you control. Shopify says you can "Create auto-billed subscriptions that renew weekly, monthly, or yearly" and "Apply dollar amount, percentage, buy X get Y, or fixed-amount discounts to subscription products." Its sales report also has a purchase option column that separates "a subscription or a one-time purchase."

Judge it per customer. Compare gross profit per customer for subscribers against one-time buyers over the same period, not AOV per order.

Raise the subscription order. Offer a larger size or a multi-unit pack as the subscription default, and use your subscriber emails to suggest an add-on before the next order ships.

Watch the discount. A subscription discount you'd never offer on a one-time order needs the extra orders to pay for it.

How do loyalty tiers reward basket size?

Tie the reward to spend. When points are earned per dollar and each tier starts at a spend level, a bigger order moves a customer closer to the next reward. A tier perk like free shipping at a lower threshold gives your best customers a reason to keep ordering with you.

Loyalty starts before the first order, in the whole buying experience: the product page, the checkout, the confirmation, the delivery. The second order is where it shows. A loyalty program works when that first experience was good, and it can't fix one that wasn't. Our eCommerce loyalty program examples show how brands structure points and tiers.

Price your rewards from gross profit too. A reward is a discount with a delay, so cost it the same way you cost any other offer.

Which emails and flows carry these offers?

The flows customers already open are where order value offers belong. Your order confirmation email can show the free shipping threshold and a related product for next time. The post-purchase flow suggests what completes the first order. Cart reminders can swap a single item for a bundle.

Klaviyo also has a flow built for timing a cross-sell. It describes it as "a flow that automatically sends messages to customers based on product-level repeat purchase timing." It's an add-on: Klaviyo says you can use it "with Advanced KDP or Personalization", and "These products are not included in Klaviyo's standard marketing application."

Worked example: discount versus free shipping threshold

These are made-up numbers to show the mechanism. Say your AOV is $60, product cost is 40% of the selling price, and you pay $8 to ship every order because shipping is free on everything.

Today. A $60 order costs $24 in product and $8 in shipping. Gross profit per order after shipping is $28.

Option A: 15% off orders over $75. A shopper buys $80 of products and pays $68 after the discount. Product cost is $32 and shipping is $8. Gross profit per order after shipping is $28. Your AOV went from $60 to $68 and you made the same money per order with more stock out of the door.

Option B: free shipping over $75, $6 shipping below it. A shopper buys $80 of products and pays $80. Product cost is $32 and shipping is $8. Gross profit per order after shipping is $40. A shopper who stays at $60 pays $6 toward shipping, so that order returns $34.

Both options raise AOV. Only one raises gross profit per order. Whether shoppers actually reach the $75 threshold is something only a test on your own store can tell you, so run it and read the result on gross profit, not on AOV.

When this does not apply

Low order volume. If you don't place enough orders to read a test, you'll be guessing. Fix traffic and conversion first.

Thin margins. If gross profit per order is already close to zero, a threshold or bundle discount can push it below. Fix pricing or product cost first.

One low-price product. If you sell a single item that customers only need one of, bundles and thresholds have little to work with. Repeat orders matter more than order size.

Your problem is repeat purchase. If customers buy once and never come back, a bigger first basket won't solve it. Start with your repeat purchase rate instead.

Subscriptions on a one-time product. If nobody runs out of what you sell, there's nothing to replenish, so subscribe-and-save has little to work with.

How Hayes Media raises order value for clients

Hayes Media runs email, SMS, loyalty programs, and subscribe-and-save programs for eCommerce brands. We work in Klaviyo for most accounts and have experience in most other email and SMS platforms. On order value, Hayes Media sets thresholds, bundles, subscription offers, and loyalty rewards from the brand's own margin, puts them in the flows customers already open, and judges every change on gross profit per order and lifetime gross profit to CAC.

The retention practice is "Trusted by 50+ eCom brands", with "$500M+ Client revenue driven" and "8 yrs Retention expertise". One account went from 0% to 59% of revenue from retention, with a "54% Returning Customer Rate". Those figures and our case studies are published by Hayes on its own site. Hayes has no third-party review profile and no Klaviyo partner listing, so judge us on what an audit finds in your account.

We typically work with brands doing at least $100K per month in revenue. It's a guideline, not a gate: a smaller brand with a clear budget set aside to scale and real order volume already qualifies. One-time email projects start from $2,000 USD, and retainers for ongoing full management start from $4,000 USD per month, scoped on the discovery call. See how our email and SMS service works.

Book a discovery call and we'll audit your AOV, free shipping threshold, offers, and flows against your gross profit per order, then show you which lever to test first. No onboarding fees. No lock-in contracts. No junior marketers.

Sources

Shopify Help Center, Sales reports: https://help.shopify.com/en/manual/reports-and-analytics/shopify-reports/report-types/default-reports/sales-report

Shopify Help Center, Order reports: https://help.shopify.com/en/manual/reports-and-analytics/shopify-reports/report-types/default-reports/order-reports

Shopify Help Center, Setting up shipping rates: https://help.shopify.com/en/manual/fulfillment/setup/shipping-rates/setting-up-shipping-rates

Shopify Help Center, Shipping strategy: https://help.shopify.com/en/manual/fulfillment/setup/shipping-rates/shipping-strategy

Shopify Help Center, Shopify Subscriptions: https://help.shopify.com/en/manual/products/purchase-options/shopify-subscriptions

Klaviyo help center, How to use product feeds and recommendations: https://help.klaviyo.com/hc/en-us/articles/115005082787

Klaviyo help center, How to create a dynamic cross-sell flow using the product analysis report: https://help.klaviyo.com/hc/en-us/articles/33789205940507