{
  "slug": "free-shipping-threshold",
  "title": "Free Shipping Threshold Calculator",
  "heading": "Free Shipping Threshold Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/free-shipping-threshold",
  "summary": "Find the order minimum that lifts AOV without eating your margin.",
  "description": "A free shipping threshold works by getting customers who would have ordered below it to add items and cross the line, lifting average order value. But if you set the threshold too low relative to your current AOV, you're just giving away shipping on orders that would have happened anyway, without the offsetting AOV lift. This calculator compares your current average shipping cost you absorb per order against a proposed threshold, using an assumed percentage of customers who will add items to reach it, to show the net margin impact of introducing or changing a free shipping threshold. Enter current AOV, average shipping cost you currently charge or absorb, proposed free shipping threshold, expected percentage of near-threshold customers who add items to qualify, and their added item margin. The output shows net margin impact per order and whether the threshold is likely to pay for itself through AOV lift versus simply costing you shipping margin on existing order volume.",
  "formula": "Shipping cost given away = orders qualifying × current shipping cost; AOV lift value = orders that upsize × margin on added items; Net impact = lift value − shipping cost given away.",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=free-shipping-threshold",
  "inputs": [
    {
      "id": "currentAov",
      "label": "Current average order value",
      "kind": "number",
      "hint": null,
      "default": 48,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "shippingCost",
      "label": "Average shipping cost per order",
      "kind": "number",
      "hint": null,
      "default": 7.5,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "threshold",
      "label": "Proposed free shipping threshold",
      "kind": "number",
      "hint": null,
      "default": 60,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "pctUpsize",
      "label": "% of near-threshold customers who add items",
      "kind": "number",
      "hint": null,
      "default": 35,
      "unit": "%",
      "min": 0,
      "max": 100
    },
    {
      "id": "addedItemMargin",
      "label": "Margin on items added to qualify",
      "kind": "number",
      "hint": null,
      "default": 9,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "ordersMonth",
      "label": "Orders per month near this range",
      "kind": "number",
      "hint": null,
      "default": 800,
      "unit": null,
      "min": 0,
      "max": null
    }
  ],
  "outputs": [
    {
      "id": "netImpact",
      "label": "Net monthly margin impact",
      "format": "currency",
      "hint": null,
      "primary": true
    },
    {
      "id": "liftValue",
      "label": "Margin lift from upsizing",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "shippingGiveaway",
      "label": "Shipping cost given away",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "newAov",
      "label": "Estimated new blended AOV",
      "format": "currency",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Current average order value: 48 $",
      "Average shipping cost per order: 7.5 $",
      "Proposed free shipping threshold: 60 $",
      "% of near-threshold customers who add items: 35 %",
      "Margin on items added to qualify: 9 $",
      "Orders per month near this range: 800"
    ],
    "outputs": [
      "Net monthly margin impact: -$3,480",
      "Margin lift from upsizing: $2,520",
      "Shipping cost given away: $6,000",
      "Estimated new blended AOV: $52.20"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter current average order value ($).",
      "Enter average shipping cost per order ($).",
      "Enter proposed free shipping threshold ($).",
      "Enter % of near-threshold customers who add items (%).",
      "Enter margin on items added to qualify ($).",
      "Enter orders per month near this range.",
      "Read your net monthly margin impact on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "currentAov": 29,
        "shippingCost": 4.5,
        "threshold": 35,
        "pctUpsize": 20,
        "addedItemMargin": 5,
        "ordersMonth": 500
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "currentAov": 48,
        "shippingCost": 7.5,
        "threshold": 60,
        "pctUpsize": 35,
        "addedItemMargin": 9,
        "ordersMonth": 800
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "currentAov": 77,
        "shippingCost": 12,
        "threshold": 95,
        "pctUpsize": 55,
        "addedItemMargin": 14,
        "ordersMonth": 1300
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "Where should I set the threshold relative to AOV?",
      "a": "A common rule is 20-30% above your current AOV. Too close to current AOV gives away shipping on orders that would have happened anyway; too far above it and few customers bother reaching it, so the AOV lift never materializes."
    },
    {
      "q": "Should the threshold change by season or promotion?",
      "a": "Yes, many retailers raise thresholds slightly during high-margin, high-demand periods and lower them during clearance or slow seasons to encourage volume. Just be consistent within any single campaign to avoid confusing repeat shoppers."
    },
    {
      "q": "What if my current shipping is already free?",
      "a": "Then this calculation shifts to comparing a higher threshold that reduces overall shipping subsidy against the AOV lift a lower threshold currently provides. Model both threshold levels and compare net margin impact directly."
    },
    {
      "q": "How accurate is the upsizing percentage assumption?",
      "a": "It varies widely by category and how close typical carts sit to the threshold; 25-45% is a reasonable starting range for stores where the threshold sits within striking distance of AOV. Validate with an A/B test or Shopify's cart analytics once live."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/shopify-margin-calculator",
    "https://www.revenuelab.fyi/toolbox/cart-abandonment-recovery",
    "https://www.revenuelab.fyi/toolbox/packaging-cost-per-order"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — Free Shipping Threshold Calculator (https://www.revenuelab.fyi/toolbox/free-shipping-threshold)"
}