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.