Free shipping over X: how to calculate the threshold that lifts order value without killing margin
Nico Bértolo · 2026-10-27
In short
- Don’t pick the threshold by gut. The minimum that doesn’t lose money is your average order value plus the shipping fee you charge today divided by your gross margin.
- Set it slightly above that minimum and close to a natural product combination, so reaching it means adding one item, not three.
- Show it before the cart: in the header, on the product page and with a progress bar.
Free shipping over a set amount is probably the most common way to raise average order value, and one of the worst calculated. Most stores pick a round number that sounds right. Here’s how we work it out.
The minimum threshold formula
Minimum threshold = average order value + (shipping fee you charge today ÷ gross margin)
Below that amount, every order that reaches free shipping earns you less than before. Above it, more. If both figures include VAT, the ratio still holds.
A worked example
A store with a €42 average order, a 60 % gross margin and a €4.95 shipping fee: 4.95 ÷ 0.60 = €8.25, so the minimum is €50.25. With a best-seller at €14, a €55 threshold asks for exactly one more item. Remember the hidden cost: orders that were already above €55 stop paying for shipping.
How to show it
- A thin header bar: “Free shipping over €55”.
- A line next to the price on the product page.
- A progress bar in the cart with two or three add-ons that fit the gap.
- In Shopify, set it up as a €0 rate with a minimum order value, or as an automatic free-shipping discount.
Is your threshold in the right place? We calculate yours from your real orders and build it into the cart with the suggestions that make it work. Book a call
Free shipping isn’t a gift to the customer. It’s a polite way of asking for one more product.
Nico Bértolo, 224
Frequently asked questions
How do I calculate my free-shipping threshold?
Add your current shipping fee divided by your gross margin to your average order value. With a €42 average order, a €4.95 fee and a 60 % margin, the minimum is €50.25.
Is free shipping better than a discount?
Usually, yes: customers add products to reach it, while a discount lowers the price of what they were already buying.