Free Shipping Threshold Calculator
A free-shipping threshold is a bet: customers add more to their cart to qualify, but you absorb the shipping cost. This compares your profit per order today against what it becomes after the threshold, using the AOV lift you actually expect — not just the headline promise.
What your result means
The calculator compares profit per order today with profit per order after you offer free shipping above a threshold, using the AOV you expect once the threshold is live.
It also shows the AOV needed to break even: the average order value at which absorbing shipping leaves you exactly as well off as today. If your expected AOV is above it, the threshold should pay.
How the free shipping formula works
Profit per order today = Current AOV × Gross margin Profit per order with free shipping = Expected AOV × Gross margin − Shipping cost Break-even AOV = (Profit per order today + Shipping cost) ÷ Gross margin
- Current AOV
- average order value today
- Expected AOV
- average order value you expect once free shipping is live
- Shipping cost
- what you pay to ship an order
The calculator assumes customers pay for shipping today. The guide to free shipping vs flat rate shipping compares the other options.
Worked example
Worked exampleExample numbers
These match the calculator's default inputs.
| Input | Value |
|---|---|
| Current AOV | $60 |
| Expected AOV with free shipping | $80 |
| Gross margin | 45% |
| Shipping cost per order | $6 |
- Profit per order today = $60 × 45% = $27
- Profit per order with free shipping = $80 × 45% − $6 = $30
- Break-even AOV = ($27 + $6) ÷ 45% = $73.33
The expected $80 AOV clears the $73.33 break-even, so the threshold adds about $3 of profit per order.
How to make free shipping profitable
- Set the threshold just above your current AOV, so it nudges customers rather than putting free shipping out of reach.
- Suggest add-ons that close the gap, such as low-cost, high-margin items near the cart total.
- Negotiate shipping rates. Every dollar off shipping lowers the break-even AOV.
- Measure the real AOV lift after launch and rerun the numbers. If AOV doesn't rise enough, raise the threshold.
To see what a higher AOV is worth across all your orders, try the AOV uplift calculator.
Common mistakes
- Guessing the expected AOV too high. Only some customers will add items to qualify. Be conservative, then measure the real result after launch.
- Using list-price shipping rates. Use the rate you actually pay your carrier, including packaging.
- Forgetting orders that already qualify. Customers whose baskets were already above the threshold now get free shipping too, and you absorb their shipping as well. The break-even AOV covers this only if your expected AOV reflects all orders.
- Ignoring heavy or remote orders. If some products or destinations cost far more to ship, exclude them or set a higher threshold for them.
- Setting it and forgetting it. Carrier rates and your AOV change. Rerun the numbers every few months.
FAQ
How do I choose a free shipping threshold?
Start a little above your current average order value, so many customers only need to add one more item to qualify. Then check that the AOV you expect at that threshold is above the break-even AOV this calculator shows.
What if my customers already pay for shipping?
That's what this calculator assumes for today: shipping is paid by the customer, so profit per order is AOV × gross margin. With free shipping, you pay the shipping cost out of your margin.
What if the result says 'Never at this margin'?
That appears when gross margin is zero, so no order value can cover the shipping cost. Fix pricing or product costs first.