Free shipping is not a free cost. The customer stops paying a delivery charge, but the carrier still expects payment. A higher basket can cover that change—or leave you doing more work for less money.
Before copying a competitor's minimum order amount, use our free shipping threshold calculator. It separates two useful questions: what basket covers your chosen contribution target, and what basket preserves the contribution from your current offer?
Why average order value is not enough
A store with $50 average orders and a 60% product margin has different room for shipping than a store with the same $50 orders and a 20% margin. The average order value alone does not reveal the difference.
Shipping rates can also change with parcel weight, destination, packaging and product mix. A threshold copied from a larger retailer may reflect contracts and baskets you do not have.
Use recent costs from your own store. Shopify's shipping setup guidance describes setting order-based shipping rules. Those settings determine eligibility; they do not calculate whether your particular offer leaves enough contribution.
A worked basket: $50 is not the break-even answer
Take this example, with product value measured after discounts and before tax:
| Input | Example |
|---|---|
| Current merchandise basket | $50 |
| Product gross margin | 40% |
| Percentage selling fee | 3% |
| Fixed fee | $0.30 |
| Carrier cost | $8 |
| Packing cost | $1 |
| Advertising cost per order | $10 |
| Contribution wanted per order | $5 |
For every extra dollar of merchandise, 40 cents remain after product cost. The percentage selling fee uses another 3 cents. That leaves a 37% marginal rate to cover the entered fixed costs and target.
The target threshold is ($8 + $1 + $10 + $0.30 + $5) ÷ 37%, or $65.675675…. Round up to $65.68. At that basket, the model leaves at least the $5 target before costs it excludes.
A threshold rounded down can fall below the exact target. A small display difference is still worth getting right when code applies an offer across many orders.
Preserving an existing offer is a different calculation
Suppose the current $50 basket also collects $5 of shipping from the customer. Under the example fee assumption, the extra payment incurs a 3% fee, so that shipping charge contributes $4.85 after its percentage fee.
Current contribution is $4.05. Giving the same basket free shipping drops it to −$0.80. The basket needs to grow enough to replace the lost $4.85.
At the 37% marginal rate, that needs $13.108108… more product value. The preservation threshold is $63.11.
That is lower than the $65.68 needed for the separate $5 target. Neither number is a universal best threshold. They answer different questions about an explicit cost model.
Check margin, not markup
If a product costs $30 and sells for $50, its gross profit is $20. Its product gross margin is 40% of sales; its markup is 66.67% of cost. Entering 66.67 into a field that asks for margin makes the shipping offer look more affordable than it is.
Read the margin versus markup guide if the two reports use different names. Then check your product mix: adding a low-margin item may not preserve the original basket margin.
The calculator does not assume a product category's industry margin. A margin you do not know should be investigated rather than replaced with a convenient average.
Discounts can move the qualifying basket
Shopify's free shipping documentation explains how eligible product discounts affect the minimum purchase amount. Taxes do not count toward that product minimum.
Check the actual store rule as well as the cost model. If you advertise free shipping above $65 but another discount reduces eligible merchandise to $60, the customer may no longer qualify. Gift-card purchases, payments and discount combinations also have platform-specific treatment; confirm your setup in the provider documentation.
A confusing offer can create support work even if its arithmetic is correct. Put the minimum, eligible destinations and material exclusions where customers can see them before checkout.
Stress-test the delivery cost
A basket that covers an $8 shipment may fail on an $11 shipment. Our calculator shows what happens when carrier cost rises by $2 and $5 while the other assumptions remain unchanged.
Those are sensitivity scenarios, not measured carrier forecasts. Use your own recent parcel costs to choose the relevant range. If larger orders cross a weight band, rerun the calculation with that higher cost rather than assume shipping stays flat.
Returns need their own allowance too. Full-return cost scenarios separate outbound shipping, return shipping, retained fees and recoverable stock value. Free outbound shipping does not make those other costs disappear.
A cost floor is not a conversion promise
A mathematically affordable minimum can still be too high for your customers. A low minimum can lift sales while reducing contribution. Check the result against actual order distribution, customer geography and product mix, then test the offer carefully.
Baymard's cart-abandonment research is useful context for checkout friction. It does not tell your store's likely response to a particular free-shipping threshold, and we do not import a research average as a conversion forecast.
Calculate your threshold, document what the offer includes and compare contribution after the test. If you need help reconciling the reports, request a free manual review.