Free Shipping Threshold Calculator
Find the sweet spot for Free Shipping. Set a threshold that increases Average Order Value (AOV) enough to cover the shipping cost margin hit.
Unit Economics
Net Profit vs Cart Size
Threshold Analysis
Set threshold above $66
The Cost Gap
At the threshold of $75, you pay $8 in shipping. Your net profit drops by $8 instantly compared to a paid-shipping order of the same size.
The Recovery
You need a cart size of $66.00 to make the same profit dollars as a $50 order with paid shipping.
Recommendation
Safe Zone. Threshold is high enough to be accretive.
Execution Steps
Enter your current 'Average Order Value' (AOV).
Enter your average 'Shipping Cost' (What you pay the carrier).
Enter your 'Gross Margin %'.
Adjust the 'Proposed Threshold'. The chart shows the Net Profit at different cart sizes.
Pro Strategy
- Set your threshold slightly above the Breakeven Cart size to ensure the promotion is profitable, not just revenue-neutral.
- Don't set the threshold too high (e.g., 2x AOV). Customers will view it as unattainable and abandon the cart.
- Use a progress bar in the cart drawer ('Add $12 more for Free Shipping') to gamify the experience.
Core Concepts
Margin Erosion
When you offer free shipping, you absorb the cost. This erodes your margin. You need a larger cart size (more gross profit dollars) to offset this fixed cost.
The Nudge
Customers will add items to their cart to reach a threshold. Setting the threshold 15-20% above your current AOV maximizes this behavior.
Breakeven AOV
The cart size required to make the exact same profit dollars as your current AOV, even after paying for shipping.
What is Free Shipping Threshold Calculator?
This model compares the Net Profit contribution of orders at various values. It visualizes the 'dip' in profitability that occurs when Free Shipping kicks in, and identifies the recovery point where the extra margin from the larger cart covers the shipping cost.
Best For
- • Setting up a Shopify store.
- • Planning a holiday promotion.
- • Auditing profitability of existing free shipping offers.
Limitations
- • Assumes constant margin % across items.
- • Does not predict exactly how many users will reach the threshold (conversion lift).
Alternative Methods
Flat Rate Shipping
Charging a small fixed fee (e.g. $5) to partially offset costs.
Membership
Amazon Prime model (Prepaid shipping).
Industry Applications
See how this methodology generates real revenue uplift in different sectors.
NuFace (Skincare)
AOV was stuck at $75.
Implemented Free Shipping at $100 (33% higher). Added a 'Mystery Gift' at $150.
Hardware Store
Heavy items made shipping expensive ($15 avg).
Calculated breakeven AOV was $150. Set threshold at $199.