Free Shipping Threshold Calculator
Set a free-shipping threshold that lifts order value without giving away the margin.
About Free Shipping Threshold Calculator
A threshold has to clear two tests: it must sit far enough above current order value to change behaviour, and the margin on a qualifying order must still cover the shipping given away. Setting it at roughly 120% of current order value satisfies the first. Thresholds set below the current average order value cost margin on orders that would have happened anyway, which is the most common way this tactic loses money.
Formula
Free Shipping Threshold
Break-even order value = shipping cost ÷ gross margin; threshold is set about 20% above current AOV
- break-even order value
- The smallest order whose margin covers the shipping cost
Worked example
With the default values below, Free Shipping Threshold Calculator returns Recommended Free Shipping Threshold of $74.40. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Current average order valueminimum 0.01
- 62
- Your cost to ship an orderminimum 0
- 6.5
- Gross marginaccepts 0–100 %
- 48 %
- Expected uplift in order valueaccepts 0–100 %
- 18 %
Results
- Recommended Free Shipping Threshold
- $74.40
- Order Value That Covers the Shipping Cost
- $13.54
- Expected New Average Order Value
- $73.16
- Margin per Order After Free Shipping
- $28.62
- Verdict
- Marginal — the uplift does not cover the shipping given away
Step by step
- 1Values used
- 2Free Shipping Threshold
- 3Recommended Free Shipping Threshold= 74.40
- 4Order Value That Covers the Shipping Cost= 13.54
- 5Expected New Average Order Value= 73.16
- 6Margin per Order After Free Shipping= 28.62
- 7Verdict= Marginal — the uplift does not cover the shipping given away
Assumptions and limits
- The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or compounding frequency into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
How is Free Shipping Threshold calculated?
Break-even order value = shipping cost ÷ gross margin; threshold is set about 20% above current AOV A threshold has to clear two tests: it must sit far enough above current order value to change behaviour, and the margin on a qualifying order must still cover the shipping given away. Setting it at roughly 120% of current order value satisfies the first.
Why does Free Shipping Threshold matter?
Thresholds set below the current average order value cost margin on orders that would have happened anyway, which is the most common way this tactic loses money.
What values do I need to enter?
This calculator takes 4 inputs: Current average order value, Your cost to ship an order, Gross margin, Expected uplift in order value. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.