Where's the Break-Even Point for Free Shipping?
Offering free shipping above a certain order value tends to nudge customers into adding extra items to reach the threshold, raising average order value. The catch is that this added profit needs to be larger than the shipping cost you're now absorbing for it to actually be worth it. This calculator takes your average order value before and after adding a threshold, your margin, and your shipping cost per order, then shows the net profit or loss per order โ plus the minimum order value increase required just to break even.
How It's Calculated
| Step | Item | Formula |
|---|---|---|
| 1 | Order value increase | After AOV โ before AOV |
| 2 | Profit increase | Order value increase ร margin |
| 3 | Net profit | Profit increase โ shipping cost |
| 4 | Break-even increase | Shipping cost รท margin |
The actual increase in order value depends heavily on your product mix and customer base, so run an A/B test to get real data and keep this calculator's inputs up to date.
Frequently Asked Questions
No. If raising the threshold makes customers abandon their cart instead of buying more, revenue can actually drop. Track the real change in order value with your own data as you adjust the threshold.
It's the minimum increase in average order value needed to offset the shipping cost you're absorbing. If your actual increase is larger than this number, the free shipping threshold is profitable.
Use the actual cost you pay your carrier per order, including packaging if relevant. If shipping costs vary by region, use your average cost per order.
โป Actual figures may vary by individual circumstances. This is a reference estimate only.