Average order value tells you the average revenue per order. Contribution tells you what is left after the costs you include. You need both to judge growth.
Start with a clear definition.
For this example, order revenue is net of discounts and refunds and excludes sales tax. Contribution before acquisition subtracts product cost, fulfillment and shipping subsidy, and payment fees. Your own accounting may include additional variable costs.
A worked example.
Suppose a store receives 100 orders and $10,000 in net order revenue. Average order value is $10,000 ÷ 100 = $100.
- Product cost per order: $35
- Fulfillment and shipping subsidy: $10
- Payment fees: $3
Contribution before acquisition is $100 − $35 − $10 − $3 = $52 per order, or 52% of net revenue.
If customer acquisition costs $30 for that first order, contribution after acquisition is $22. That $22 still needs to help cover overhead, salaries, and other costs. It is not net profit.
Why a discount can change the answer.
If a discount reduces the order to $90 while product and fulfillment costs stay at $45, and the illustrative payment fee becomes $2.70, contribution before acquisition falls to $42.30. With the same $30 acquisition cost, $12.30 remains.
Revenue per order fell by 10%, but remaining contribution after acquisition fell from $22 to $12.30. This simplified example shows why discount decisions need more context than conversion alone.
What can you afford to pay?
Using the original numbers, a $52 acquisition cost would consume all first-order contribution before overhead. That is a mathematical break-even point under these assumptions—not a sensible default spending target.
A lower acquisition ceiling leaves room for overhead and uncertainty. Future purchases may improve the economics, but use observed cohort behavior rather than assuming every customer returns.
Check the definitions in your reports.
- Are discounts, refunds, taxes, and shipping revenue handled consistently?
- Does acquisition cost divide spend by new customers or all orders?
- Are fulfillment, returns, and affiliate commissions included?
- Are you comparing the same time period and customer cohort?
These figures are a hypothetical teaching example. Substitute your actual costs before making a spending decision.
Put this into practice.
Start with the free worksheet or talk with Ashley about your specific challenge.