Free shipping threshold calculator
Too low a threshold gives money away, too high a one does not change buying behaviour. Work out the right range from your own numbers.
Shipping cost = what the carrier actually costs you (parcel locker, courier), not the shipping fee you charge the customer.
How is the threshold chosen?
Minimum threshold = shipping cost ÷ margin
Example: a shipping cost of 4 € and a 30% margin. The order has to be at least 4 ÷ 0.3 = 13.33 € for shipping not to eat the whole profit. That is an absolute floor, not a recommendation - at that level you earn zero on the order.
In practice the threshold is set above the average order, usually about 1.2-1.5 times it. The idea is that a customer with a 38 € basket adds one more product to reach 50 € - the threshold has to be within reach, but not effortless.
Three things to remember when setting the threshold
- On orders below the threshold, free shipping is paid by you. If you run a "free shipping for everyone" campaign, multiply the shipping cost by the number of orders - that is the price of the campaign.
- The threshold moves the average basket, but not without limit. If you set the threshold at twice the average basket, most customers simply pay for shipping and the threshold stops working.
- The competitor's threshold matters. If a competitor offers free shipping from 29 € and you from 79 €, that is a visible minus at the same product and the same price.
The calculator shows your numbers. The market shows your competitors'.
Look360 monitors your and your competitors' prices in online stores every night and tells you when someone undercuts you. Start with the free store health check - the score is instant, no sign-up.