Why a free shipping threshold works
Shipping costs are one of the most common reasons customers leave at checkout. Free shipping removes that reason. But free shipping on every order means you pay for every parcel, including the small orders that barely make a profit.
A threshold, like "Free shipping on orders over 499 kr", solves both problems. Customers who are close to the limit add one more item to reach it, and the margin on that extra item pays for the shipping. Your average order goes up, and free shipping pays for itself.
How the calculator works
- Extra spend needed: how much more a customer has to buy for your margin on it to cover the shipping.
shipping cost ÷ margin, plus VAT, because the threshold is a price with VAT. - Break-even threshold: your average order plus that extra spend. Below this, free shipping costs you money on an average order.
- Suggested threshold: 15–30% above your average order, but never below break-even, rounded up to a normal shop price.
Example: an average order of 400 kr, shipping that costs you 40 kr, and a 40% margin. The customer has to buy 100 kr more without VAT (40 ÷ 0.40), which is 125 kr with 25% VAT. Break-even is 525 kr, so a threshold of 599 kr works well.
Tips for your free shipping limit
- Show it everywhere. A threshold only works if customers know about it. An announcement bar at the top of every page is the classic place.
- Help customers reach it. Show small, cheap products near checkout that are easy to add: socks, accessories, refills.
- Test it. Try a threshold for a month, then check your average order value and conversion rate, and adjust.
- Use it instead of a discount. Free shipping over a limit grows the basket. A discount just lowers the price. See what a discount really costs with our discount cost calculator.
- Make it a reward. Free shipping can also be the prize in a game. Visitors who win a short daily puzzle like MojiTiles get a free shipping code, and everyone else still has the threshold.
Questions and answers
What is a free shipping threshold?
It is the order amount above which shipping is free, for example free shipping on orders over 499 kr. Customers who are just below the limit often add one more item to reach it, which raises your average order value.
How do I calculate a free shipping threshold?
Find out how much extra a customer must spend for the margin on it to pay for the shipping: shipping cost ÷ margin. Add that to your average order value. With an average order of 400 kr, shipping that costs you 40 kr and a 40% margin, each order must bring in 100 kr more (without VAT), so the threshold should be at least 525 kr with 25% VAT.
Should the threshold be above my average order value?
Yes. If it is below your average order, most orders get free shipping without buying anything extra, and you simply pay their shipping. A common rule is to set it 15–30% above the average order value.
Is free shipping better than a discount?
Often. Customers tend to value free shipping highly, and a threshold makes them spend more to get it. A discount lowers the price of every order, whether the customer would have bought anyway or not.