Free shipping threshold calculator

A free shipping threshold pays when bigger carts add more margin than the shipping fees you stop collecting and the orders you lose. Compare contribution per 1,000 visitors before and after, not conversion rate alone. Most brands set the threshold a little above their typical order, often around 20–30% higher.

Threshold earns more, per 1,000 visitors: $23.96
Contribution per 1,000 visitors now: $389
With the threshold: $412.97
Contribution per order, now and with it: $19.45 → $21.74

Connect your store and Tera Ads shows your real profit after ads and returnsFree for one business, no card needed.

The formula

Contribution per order now = order value × product margin − shipping you pay + shipping you charge
With the threshold = new order value × product margin − shipping you pay + share still below × shipping you charge
Per 1,000 visitors = 1,000 × conversion rate × contribution per order

Rates are shares between 0 and 1: 30% is 0.3.

Worked example

Today 2% of visitors buy, orders average $41, and you charge $2.45 for shipping that costs you $3.50.

With free shipping above a threshold, you expect 1.9% to buy and orders to average $49, with 30% of orders still below it.

Product margin is 50%.

Contribution per order rises from $19.45 to $21.75, and per 1,000 visitors from $389 to $412.95: the threshold earns $23.95 more for every 1,000 visitors.

Questions

Where should I set the threshold?

A little above your current typical order, often around 20–30% higher, so buyers just below it add one more item. Too high and few reach it; too low and you pay shipping on orders that would have been that size anyway.

How do I know the new conversion rate and order value?

You don't until you test. Use estimates here to see whether it's worth trying, then run the threshold for a few weeks and put in the real numbers.

Does this include returns?

No. If returns are common, use a product margin after returns, or check the result with the contribution margin calculator.

Should I enter order value with or without sales tax or VAT?

Use order value after the tax is taken out, because it isn't yours to keep. Counting it makes every ROAS look better than it is. Keep product cost, fees and ad spend on the same basis.

The full guide

Free Shipping Threshold: How to Set One That Raises ProfitA free shipping threshold nudges buyers to add more to the cart. How to pick the number from your order data, what it costs, and how to test it.