Foundation · 2 min
What you need to know
How do I offer free shipping without losing money?
Calculate the shipping cost for your average order and confirm that the product margin covers it. If not, either raise prices slightly to absorb the cost, set a minimum order threshold that brings average order value above the break-even point, or restrict free shipping to specific products or regions where it is viable.
Who pays for free shipping?
Someone always pays: the merchant absorbs it from margin, the customer pays through slightly higher prices, or an order threshold ensures the sale value covers the cost. Knowing which applies to each product type lets a merchant set policy deliberately rather than discovering the cost at month-end.
What is a free-shipping threshold?
A free-shipping threshold is the minimum cart value at which shipping is offered at no charge. A well-set threshold encourages customers to add more to the cart while ensuring the extra order value covers the carrier cost. A threshold set too low funds free shipping on orders that cannot support it.
How do I calculate the right free-shipping threshold?
Start with the average carrier cost for the orders where you would offer free shipping. Add that to the average order value and check whether the combined margin still meets your targets. Model a range of thresholds against recent orders to see the effect before publishing.
Does raising a free-shipping threshold always improve profitability?
Not always. A higher threshold may increase average order value but also reduce conversion for customers who were already near the threshold. Test changes against a real sample and watch both average order value and order count, not just revenue.
Should free shipping apply to all products and regions?
Restricting free shipping to products and regions where margins support it reduces the risk of offering it where it loses money. Bulky, heavy or remote-delivery orders may need a minimum threshold or a flat contribution rather than full free delivery.
Foundation · 2 min
Frequently asked questions
How do I tell if my free-shipping offer is profitable?
Compare the shipping cost per order against the margin contribution for orders that used the free-shipping offer. If the margin on those orders is lower than the shipping cost you absorb, the offer is unprofitable at those order values. Adjust the threshold or restrict by product category.
What should I display when an order is close to the free-shipping threshold?
Show the remaining amount needed to qualify, keeping the message accurate. Do not imply an order qualifies before it does or round down the required amount. A clear, honest nudge can increase cart value without misleading customers.