Free Shipping Threshold Calculator
Enter your average order value, your margin and what shipping costs you. The calculator finds the order value at which free shipping pays for itself and suggests a threshold to set in your store.
How to use this Free Shipping Threshold Calculator
- Enter your average order value today.
- Enter your gross margin before shipping, as a percentage of the order value.
- Enter what shipping costs you on an average order.
- Enter the margin you still want to keep after paying for free shipping.
- Press Calculate to see the threshold and the amount shoppers would need to add.
How to calculate a free shipping threshold
Free shipping works when the margin on the order is large enough to pay for shipping and still leave what you want to keep.
- Order value that covers shipping = shipping cost / gross margin
- Threshold for a target margin = shipping cost / (gross margin – margin to keep)
- Suggested threshold = the target rounded up to the next $5
- Amount to add = suggested threshold – average order value
Worked example
Your average order is $32.00 with a gross margin of 40%, and shipping costs you $7.50. The order value that just covers shipping is 7.50 / 0.40 = $18.75. If you also want to keep a 20% margin after shipping, the threshold is 7.50 / (0.40 – 0.20) = $37.50, so a round threshold is $40. An average shopper must add $8.00 to reach it. Shipping is 23.4% of your average order today.
A threshold above your average order nudges customers to add items. Set it too high and shoppers leave. Many stores pick a threshold 20 to 40 percent above their average order, then test it. Change the margin to keep to see how a more cautious or aggressive target moves the figure.
Assumptions & limits
- The result uses one average shipping cost. Heavy and far-away orders cost more, so check your own data.
- The calculator assumes your gross margin is the same across orders. A mix of products changes it.
- It does not model how shoppers react, so test the threshold with real orders.
- Payment fees, returns and discounts are not included unless you subtract them from the margin.
- The default values are examples. Last reviewed November 5, 2026.
Frequently asked questions
How do I set a free shipping threshold?
Divide your shipping cost by your margin to find the order value that pays for it, then raise it to leave the margin you want to keep.
Does free shipping increase sales?
Many stores see higher conversion and larger orders. Test your own results.
What if my threshold is above my average order?
Shoppers must add items to qualify. That can lift the average order, but too high a threshold loses sales.
Should I round the threshold?
Round numbers such as $50 are easy to understand. The calculator rounds up to the next $5.
How is gross margin defined here?
It is the order value minus product cost, divided by the order value, before shipping and fees.
Can I offer free shipping on some products only?
Yes. Use the margin and shipping cost for that group of products.
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Last updated: November 2026