Average transaction value measures the average amount that customers spend on each purchase.
A higher average transaction value is a healthy indication that customers are either purchasing more expensive products or a higher volume of products during each sale. Average transaction value is, therefore, a useful metric to determine pricing and product strategies. indicates that customers are
Why does average transaction value matter?
While it's by no means the end-all-be-all, analyzing your average transaction value helps you better understand how your customers are interacting with your products. For one thing, it helps evaluate ROI. It also has serious implications on pricing strategy, for example, a low average transaction value might indicate that your products are underpriced, undervalued, or that your selling strategy isn’t sustainable (i.e. it is not encouraging the type of spend that you want to see for success).
Average transaction value can also help determine your product strategy; you can better understand things like how your lower-priced items impact your bottom line, or it can also signal that you might need to shift your product focus.
How do you measure average transaction value?
Simple: calculate your total revenue for a given period, then divide it by the number of transactions during that same period.
Formula for Revenue per Employee
Total sales/ Number of Transactions (in the same time period)
A high average transaction value means that you’re selling more expensive products or a higher quantity of products.
A low average transaction value means that you’re either not selling enough products per sale, or that your products are underpriced.
