Average order value is generally sales revenue divided by the number of included orders, but the revenue definition and excluded order statuses must stay consistent.
Official answer
The basic formula is revenue divided by order count, but the result depends on what you call revenue. Gross sales, net sales, and total sales can produce different AOV values.
For merchandising analysis, Net Sales divided by completed orders is often more useful because discounts and returns are reflected. For cash collected, Total Sales may be more appropriate.
Document whether cancelled, test, fully refunded, and zero-value orders are excluded so comparisons remain consistent.
Follow-up questions
Should refunds be included when calculating AOV?
Use a consistent revenue definition. If AOV is based on net sales, refunds and returns should reduce revenue. If you use gross sales, they will not.
Should cancelled or test orders count toward order count?
Usually no. Excluding cancelled, test, and zero-value orders keeps the denominator aligned with genuine completed purchases.