To work on increasing average transaction value, identify the customer’s need, prepare a relevant offer, and choose the measures you will use to evaluate it in advance. A higher amount per purchase may coincide with fewer purchases, lower revenue, and lower gross profit. So review these measures together.
Calculate average transaction value using consistent rules
Average transaction value = revenue for a period / number of receipts for the same period. For an online store, the corresponding measure is calculated using the number of orders.
Count receipts separately from customers and visitors. Revenue per customer has a different denominator: the number of people who made a purchase during the period. Do not use that number in the average transaction value formula.
Write down the calculation rules before comparing results. Use the same period boundaries, stores, sales channels, and rules for which receipts to include. Agree on which amounts you will use: how discounts are handled and which period returns are assigned to. Apply these rules to both samples.
Alongside average transaction value, calculate gross profit: revenue minus the cost of goods sold. Gross margin shows its share of revenue: gross profit / revenue × 100%. These calculations do not account for all store expenses.
Illustrative example: average transaction value rose, but revenue fell
Suppose we compare two periods of seven full days at one store. All amounts are after discounts, and there are no returns. Other expenses are not included. This is an arithmetic illustration; seven days does not establish an adequate test duration.
| Measure | First period | Second period |
|---|---|---|
| Revenue | 50,000 UAH | 48,000 UAH |
| Number of receipts | 100 | 80 |
| Average transaction value | 500 UAH | 600 UAH |
| Cost of goods sold | 30,000 UAH | 31,200 UAH |
| Gross profit | 20,000 UAH | 16,800 UAH |
| Gross margin | 40% | 35% |
Average transaction value rose by 20%, the number of purchases fell by 20%, and revenue fell by 4%. Gross profit also declined. Do not decide based only on the increase in average transaction value. Investigate the reasons for the changes separately.
Prepare a higher-priced option or a related add-on
Upselling is offering a higher-priced version of a product. Cross-selling is offering a related product alongside the main purchase. Before suggesting a higher-priced option, check whether it meets the customer’s need.
Ask the salesperson to first find out how the customer will use the product and then explain a specific difference in the higher-priced option and the price difference. Offer it when that difference matters to the customer. Let them choose the original product.
For an add-on purchase, prepare a list of compatible items. Check the main product’s specifications, what is included, and the add-on’s intended use. Train salespeople to explain compatibility and price. If the customer declines, end the offer.
Related products can be bundled into a set of two or more items. If you plan to offer a discount, first calculate the discount amount and the gross profit from selling the set. Do not apply a discount automatically: even a small price reduction may require a substantial increase in sales volume to preserve profitability.
Choose one offer and review sales results
Suppose your store sells a product that needs batteries but does not include them. You could ask the salesperson to offer compatible batteries, explain their price, and let the customer choose. Make a simple plan for tracking sales while using this offer.
- Define the offer. Write down which products the batteries fit and when the salesperson should offer them. Check compatibility, what the main product includes, and whether the add-on is in stock. If the customer declines, the salesperson ends the offer.
- Set the periods and accounting rules. Record the start and end dates in advance. For comparison, choose an earlier period of the same length covering the same days of the week. Use the same stores, sales channels, and rules for including receipts, handling discounts, and assigning returns to a period. Assign someone to keep the records and follow these rules throughout both periods.
- Record actual figures. Keep a daily table of receipt counts, revenue, cost of goods sold, and gross profit. Calculate average transaction value and gross margin for each full period using the formulas above. Record the number and value of returns and any additional expenses for the offer separately. Do not deduct returns or discounts again if they are already reflected in revenue. Review additional expenses separately from gross profit.
- Record sales conditions. Note when the main product or batteries were out of stock, prices changed, promotions ran, or opening hours changed. Avoid introducing planned new discounts or other offers during the chosen period; if changes occur, record them in the table.
- Set spending and loss limits. Before starting, record a budget for additional expenses and an acceptable decrease in gross profit compared with the chosen earlier period. Decide when to review the records and which figures will prompt you to pause the offer and investigate.
- Compare and decide. At the end of the period, compare receipt counts, average transaction value, revenue, gross profit, gross margin, returns, and additional expenses. Describe what rose or fell and take the recorded changes in conditions into account. If the overall figures are acceptable and expenses are within budget, you can continue the offer and keep tracking sales. Otherwise, change the add-on or how it is offered, or stop offering it. Record your decision and the next review date.
Comparing the periods shows what happened to sales before and while the offer was used. The comparison alone does not establish why the figures changed. Review an increase in average transaction value alongside purchase counts, revenue, gross profit, and additional expenses.
How to analyze purchase amounts in Torgsoft
Torgsoft has a mode called «Аналіз кількості чеків за сумами» (Analysis of the number of receipts by amount) for working with purchase amounts. It lets you determine the store’s average purchase amount and shows the distribution of receipts across specified price ranges: the number of receipts, their total amount, their share of all receipts, and their share of total sales.
Use the distribution to compare how the number of purchases changed across different amount ranges. Compare revenue and gross profit alongside it. Before comparing, confirm how discounts and returns were handled in the data. The average amount and receipt distribution alone do not explain why changes occurred or determine whether an offer is profitable.
Go back to the previous step