Free shipping is a bribe you pay with margin. Set the threshold right and customers fund it by adding items. Set it wrong and you buy AOV with profit. Four numbers tell you which side you're on.
Recommended threshold · break-even cart value · margin verdict
Projections assume orders that upsize stretch from your AOV to the threshold. Real stretch rates vary by catalog, so watch your AOV and shipping spend for two weeks after launch and adjust.
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"Free shipping on orders over 50 dollars." Five words at the top of the page, and most founders picked the number by copying a competitor or rounding up their AOV. Nobody ran the math.
Here's what that costs. Set the threshold too low and you absorb shipping on orders that would have happened anyway, so every one of those orders donates 8 or 9 dollars of pure margin to the carrier. Set it too high and nobody stretches, so you get zero AOV lift and the banner just sits there taking up your best real estate.
The right threshold sits in a narrow band: 20 to 40 percent above your AOV, and only if the added margin from bigger carts covers the shipping you eat. That band is exactly what this calculator finds for your numbers.
AOV, gross margin, and shipping cost per order. Add your own stretch rate if you know it, or use our default.
Threshold at 1.3x AOV, the extra cart value that breaks even on shipping, and the revenue from orders that stretch.
A clear call: your margin absorbs the shipping safely, it's tight and worth a careful test, or it will eat your profit.
Set it 20 to 40 percent above your current average order value. This tool uses 30 percent as the sweet spot. Close enough that shoppers stretch to reach it, far enough that the extra items they add pay for the shipping you absorb.
Because shipping cost comes straight out of margin. On a 50 dollar order with 30 percent margin, absorbing 8 dollars of shipping erases more than half your profit. A threshold makes the customer earn it by adding items, so the extra margin funds the shipping.
The calculator tells you. It computes the extra cart value needed for the added margin to cover your shipping cost. If your realistic threshold sits below that break-even number, raise the threshold, raise prices, or skip free shipping until margins improve.
Industry studies put it around 20 to 30 percent of orders when the threshold sits close to AOV. This tool assumes 25 percent by default, and you can override it with your own cart data for a tighter projection.
A smart threshold lifts AOV, and AOV is half of your revenue per visitor. Run your numbers through the free Revenue Per Visitor Calculator and see what every click to your store earns now, and what it earns once the threshold kicks in.
Calculate My Revenue Per Visitor → Takes about 30 seconds. Three inputs, and the gap shown in dollars.