Minimum order value to offer free shipping. The Free Shipping Threshold Calculator takes current average order value, your average shipping cost per order, gross margin and returns suggested free-shipping threshold plus order value at which margin covers shipping, threshold as a share of current aov. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Online and retail margins are decided by the costs that are easy to forget: fees, shipping, returns, storage and advertising. Fill in every line, even with an estimate, before deciding what to sell and at what price. Use the worked example below to check the maths against your own figures.
How the Free Shipping Threshold Calculator works
Set the threshold a little above the average order so customers add an item to qualify, but never below the value at which the gross margin pays for the shipping.
Worked example
With the example values (current average order value of $45, your average shipping cost per order of $8, gross margin of 40%), the suggested free-shipping threshold is $54.00; order value at which margin covers shipping $20.00, threshold as a share of current aov 120%. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is suggested free-shipping threshold calculated?
covering order value = shipping cost ÷ gross margin; the suggested threshold is the higher of that and 120% of current AOV.
Which figures do I need?
Current average order value, your average shipping cost per order, gross margin. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
Which fees should I include?
Every fee your platform or provider charges on a sale: commissions, payment processing, fulfilment, storage, advertising and the expected cost of returns. Fee schedules change, so check the current rate card.
