Free Shipping Threshold Calculator
Where to set a free-shipping threshold so it lifts order value without giving away the margin.
A free-shipping threshold works by making the shipping cost feel avoidable.
How the free shipping threshold calculator works
A free-shipping threshold works by making the shipping cost feel avoidable. Customers just below it add an item to cross it, which raises order value — and the added item usually carries margin that more than covers the shipping you absorbed.
The threshold has to sit above your current average order value to do anything. Set at or below it, you are simply paying shipping on orders you were already getting. The usual guidance is 15 to 30% above AOV: high enough to require action, low enough to feel reachable.
The test is whether the margin on the added item exceeds the shipping you now absorb. This page computes that directly.
Formula: net effect = margin on the uplift − shipping absorbed
Worked examples
| Inputs | Net monthly effect | Note |
|---|---|---|
| A 95 threshold on a 78 AOV | -$903.00 | a small net loss |
| A higher margin | $525.00 | clearly worth it |
| A threshold below AOV | -$13,800.00 | gives margin away |
FAQFrequently asked questions
Where should I set a free-shipping threshold?
Typically 15 to 30% above your current average order value — high enough to require adding something, low enough to feel reachable.
Why not set it at my AOV?
Because half your orders already clear it, so you would absorb shipping on sales you were getting anyway without prompting anyone to spend more.
Does free shipping actually increase order value?
Usually, if the threshold is set above AOV. The added item typically carries enough margin to cover the shipping.
What if my margin is thin?
Then the arithmetic often does not work. At a 30% margin the added item has to be substantial to cover the shipping you absorb.
Should I show the gap to the threshold in the cart?
Yes — "spend 17 more for free shipping" is what actually triggers the behaviour the threshold is designed to produce.
Where these figures come from
- APICS / ASCM — inventory management terminology — the turnover, safety stock and reorder point definitions used here
- Australian Competition and Consumer Commission — the Australian consumer law regulator
Last checked: September 2026. These are standard retail and inventory-management definitions.