Question 1

How do I set a free shipping threshold?

Accepted Answer

Set your free shipping threshold above your average order value to encourage larger orders. The ideal threshold is the lowest value where your effective margin after absorbing shipping still meets your minimum profit target. Typically, it should be 15–30% above your current AOV.

Question 2

Does free shipping really increase sales?

Accepted Answer

Yes. Studies consistently show that free shipping increases conversion rates by 20–30% and average order values by 10–15%. Nearly 80% of consumers say free shipping makes them more likely to complete a purchase. The key is setting the right threshold.

Question 3

How do I calculate the effective margin after free shipping?

Accepted Answer

Effective margin = ((Order Value × Original Margin%) − Shipping Cost) / Order Value × 100. For example, if a $100 order has a 40% margin and $8 shipping, the effective margin is ($40 − $8) / $100 = 32%.

Question 4

Should I offer free shipping on all orders or use a threshold?

Accepted Answer

Using a threshold is almost always more profitable than blanket free shipping. It encourages customers to add more items to their cart while protecting margins on small orders where shipping costs would erase your profit.

Question 5

How often should I re-evaluate my free shipping threshold?

Accepted Answer

Review your threshold quarterly or whenever your shipping costs, product margins, or average order value change significantly. Seasonal promotions may also warrant temporary threshold adjustments.

Free Shipping Threshold Calculator

Stop running these numbers by hand.