The recommended free-shipping threshold should be high enough to protect margin but close enough to current AOV to influence buyer behavior.
How to use this Free Shipping Threshold Calculator
Enter your sale price, platform fees, payment fees, shipping, and product costs. The result estimates the unit economics of one order or transaction.
Formula
Threshold ≈ (Target Profit + Shipping Cost) ÷ Gross Margin
A good threshold is usually close enough to current AOV to change behavior while still protecting contribution margin.
For better decisions, test conservative numbers. Include ads, packaging, returns, refunds, and shipping subsidies when they apply.
Threshold benchmark
Recommended Free Shipping Threshold: a threshold too low can destroy margin, while a threshold too high may not change shopper behavior. Use Too Low / Recommended / Too High interpretation with AOV, margin, and shipping cost.
FAQ
What does this calculator estimate?
Estimate a free shipping threshold based on average order value, margin, and shipping cost.
What formula does it use?
Threshold ≈ (Target Profit + Shipping Cost) ÷ Gross Margin
Should I use this for exact tax or accounting?
No. This is a planning calculator. Marketplace rules, tax treatment, refunds, and category-specific fees can change your actual payout.
Why does profit differ from my platform payout?
Payouts often exclude product cost, inbound shipping, packaging, ads, returns, chargebacks, and other operating costs. This calculator estimates unit economics, not a full accounting statement.