What does "Average order value" actually mean?

Screen Link: Learn data science with Python and R projects

Hello Learning Assistants!

Please help me understand the definition of “average order value” on this screen. What exactly am I supposed to calculate?

1 Like

@aditya.rawal23 ,

To calculate average order value, which can be interpreted as the “mean” of all sales, simply divide the total of all sales(cash amount) by the number of orders(transactions).
For example, if the total amount of a company’s sales from several transactions is $25,000.00, resulting from 5,000 orders, $25,000 divided by 5,000 = $5, so average order value is $5.
Hope this answers your question.

1 Like

Thank you for the explanation @Ezemonye_Omereji!

1 Like