Set a free-shipping threshold that lifts order value without giving away the margin.
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.
Free Shipping Threshold
Break-even order value = shipping cost ÷ gross margin; threshold is set about 20% above current AOV
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.
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.
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.