Shipping economics
Free Shipping Threshold Calculator
Calculate your minimum order amount.
Enter order costs and margin to find a minimum basket. Test another threshold below.
Cost-supported order amount
Minimum order to meet your target
USD 67.57
Rounded upward to the next cent. A mathematical floor, not a prediction of customer behavior.
- Net contribution rate
- 37.00%
- Shipping + fixed order costs
- USD 10.00
- Target contribution
- USD 15.00
- Contribution at the minimum
- USD 15.0009
Your test threshold: USD 60.00
Contribution after entered costs
USD 12.20
Below your entered contribution target
Compared with AOV of USD 50.00
USD 17.57 more merchandise per order
35.14% difference from AOV. This is not a forecast of AOV uplift.
Contribution is not net profit. The model holds margin and per-order costs constant. Tax, returns, overhead and customer response are not automatically included.
What goes into a free-shipping decision?
Free shipping shifts delivery cost from the customer to the merchant. A minimum order value can cover that cost only if the merchandise earns enough contribution. Start with one shipping zone and a reasonably consistent product mix. Enter the following on the same revenue and cost basis.
Delivery and fixed costs
Shipping is the amount you pay when the customer pays nothing for delivery. Put packaging, handling and any fixed payment charge in other order costs if they are not already included. Count each cost once.
Margin and selling fees
Product gross margin is merchandise revenue after discounts minus product cost, divided by that revenue. It is a percentage of sales, not a markup on cost. Enter proportional selling fees separately only when they are not already deducted in the margin.
Target and comparison baskets
The target is a currency amount to retain per order after these entered costs, before other expenses. AOV and the test threshold are optional. Use merchandise order amounts, excluding separately charged delivery and taxes collected for remittance.
Enter amounts from 0 to 1 billion and rates from 0 to 100%, with up to two decimals and no commas. Use one currency throughout; the selector does not convert values. A zero shipping cost is allowed when the offer adds no delivery cost. A zero target asks only whether entered costs are covered, not whether the business is profitable. Leave optional comparisons blank when the data is unavailable.
Calculate the floor, then test your chosen amount
Let m be product gross margin as a fraction, f the proportional selling fee rate, C shipping plus other fixed order costs, and P your target contribution.
- Net contribution rate r = m − f.
- Contribution on basket B = B × r − C.
- Minimum basket = (C + P) ÷ r, when r is positive.
The minimum is rounded upward to 0.01, so a threshold rounded down does not quietly miss the target. Contribution is calculated before cash rounding and can show up to six decimals. This explains why a one-cent change can switch the target status even when a two-decimal display would look identical.
If margin is no greater than the proportional fee rate, spending more does not create positive contribution. The tool shows that boundary instead of an infinite or negative recommended threshold. Zero costs and a zero target are handled explicitly.
Worked example: a 37% net rate
Illustration only · USD 8 shipping + 2 fixed costs · 40% product margin − 3% fees
| Order amount | Contribution | Target 15 |
|---|---|---|
| 50.00 | 8.50 | Below |
| 60.00 | 12.20 | Below |
| 67.56 | 14.9972 | Below |
| 67.57 | 15.0009 | Met |
The unrounded floor is (8 + 2 + 15) ÷ 0.37 = 67.567567… . It becomes 67.57 after rounding upward. With no target contribution, the floor is 27.03. If shipping increases to 15 while the target stays 15, the floor becomes 86.49.
Before turning the result into a store offer
A cost-supported minimum is a starting point for a test, not the optimal marketing threshold. Some shoppers may add products; others may leave. Compare actual order contribution, checkout conversion and contribution per visitor after any change. A higher AOV alone does not establish an improvement if shipping subsidies or lost orders offset it.
Check expensive destinations, bulky items, split shipments and low-margin add-ons separately. An average cost can conceal loss-making orders, and adding merchandise may change shipping weight or the margin mix. This model does not quote carrier rates, select exclusions, forecast conversion or account for every return.
For Shopify stores, the official shipping-rate guide describes order-amount conditions, shipping zones and weight-based rates. Verify how your own platform applies discounts and eligibility before setting the offer. This calculator does not change any store settings.
Check the numbers behind your offer
About This Calculator
Calculate a cost-supported free shipping threshold from your margin, selling fees and delivery costs. Compare order contribution with a threshold you choose.
Frequently Asked Questions
What is the formula for a free shipping threshold?
Divide shipping cost plus other fixed per-order costs plus your target contribution by the gross margin rate minus the percentage selling fee rate. The net rate must be positive. This calculator rounds the resulting order amount upward to the next cent.
Should my free shipping threshold be above my average order value?
Compare the cost-supported floor with your current AOV and actual basket sizes. The difference shows how much extra merchandise a typical order would need, not whether customers will buy it. There is no universal AOV multiplier that guarantees a profitable offer.
What if selling fees equal or exceed my gross margin?
There is no positive contribution from an extra unit of sales in this model. If shipping, fixed costs or the target contribution are positive, no finite order amount meets that target. With zero costs and zero target, a zero net rate is a degenerate case, not evidence that a free-shipping offer is attractive.
Does the result include taxes, returns and all business expenses?
No. It includes only the product margin, proportional selling fees and fixed costs you enter. Exclude taxes collected for remittance from merchandise revenue, and avoid counting the same cost twice. Returns, advertising, overhead and changes in product mix need separate analysis unless consistently reflected in your inputs.
Can I use different currencies or shipping zones?
Use one currency and one consistent cost scenario per calculation. The currency selector changes labels only and does not convert amounts. The supported currencies use two decimal places. Run separate scenarios for destinations, weights or product groups with different costs.
The SuperCalc Editorial Team maintains calculator interfaces, formula notes, examples, and supporting explanations. Methods, assumptions, source links, and review depth vary by calculator and are documented on the relevant page where available.