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Marginory

Shopify Free Shipping Threshold Calculator

Find the optimal free shipping threshold that boosts conversion without destroying your margin. Model the profit impact before you set it live.

By Content reviewed

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After COGS, payment fees and other variable costs. Baseline assumes buyer shipping covers actual postage.

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Your test assumption; not a predicted lift

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Use your basket distribution; AOV cannot determine this share.

Without free shipping

Monthly orders50
Monthly revenue$2250.00
Monthly profit (at margin)$900.00

With free shipping at $60.00 (assumed eligibility)

New conversion rate2.88%
Monthly orders58
Monthly revenue$2587.50
Shipping subsidy cost-$402.50
Monthly profit$632.50
Profit change$-267.50

Required lift under these assumptions

Relative conversion lift to offset subsidy63.64%

How this is calculated

Monthly profit (no free ship) = Orders × AOV × Margin%
Monthly profit (free ship) = Orders × AOV × Margin% − Orders × Avg shipping cost
Shipping subsidy = New orders × Eligible share × Average postage

Assumptions

  • Conversion lift estimate is user-provided — actual lift varies significantly by niche
  • Threshold eligibility is supplied by the user; no demand or basket lift is predicted
  • Enter contribution margin after variable fees; fixed monthly overhead is excluded

Source: shopify.com/blog/free-shipping · Last verified: 2026-10-11

Review the market, fee bases and exclusions shown with this tool. Published rates and illustrative cost inputs have different certainty. Compare your breakdown with an actual order statement. Sources and methodology.

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Frequently Asked Questions

What free shipping threshold should I set on Shopify?
A common rule of thumb: set the free shipping threshold at 130% of your current average order value (AOV). If your AOV is $40, set the threshold at $52. This incentivizes order upsizing while ensuring most customers who add an item to qualify improve your margin.
Does free shipping increase Shopify conversions?
Free shipping is one of the highest-impact conversion levers in e-commerce. Studies show 65–80% of cart abandonment is due to unexpected shipping costs. Even a conditional free shipping offer (above a threshold) can lift conversion rates 10–30%.
How do I offer free shipping profitably on Shopify?
Option 1: Roll shipping cost into product price (simplest). Option 2: Set a threshold so the additional item margin from qualifying orders exceeds the shipping subsidy. Calculate: if average shipping cost is $6 and average margin per product is $12, you need customers to add 0.5 items to break even — which is realistic.
What's a worked example of the free shipping threshold trade-off?
A store with $45 AOV, $7 average shipping cost, 40% product margin, 2,000 monthly visitors, and 2.5% baseline conversion rate: without free shipping, monthly profit is roughly $900. Offering free shipping at a threshold equal to AOV, assuming a 15% conversion lift (2.5% → 2.875%), grows orders enough to add revenue but also adds $7 shipping subsidy per new order — net profit change depends on whether the margin from extra orders outweighs the subsidy. Plug in your real numbers to see your specific breakeven.
Should the threshold equal my AOV or be higher?
Setting the threshold exactly at your current AOV means roughly half your existing orders already qualify for free shipping with no behavior change — pure subsidy cost. Setting it 20–35% above AOV forces most customers to add an item to qualify, converting the subsidy into an upsell opportunity instead of a giveaway.
How does Shopify's free shipping strategy differ from Etsy or eBay sellers?
Etsy explicitly rewards free-shipping listings with better search placement (listings under $35 with free US shipping get a visibility boost), making free shipping almost mandatory for competitive Etsy listings. Shopify has no such algorithmic incentive — the only benefit is the conversion-rate lift itself, so the free-shipping decision is a pure profit calculation rather than also an SEO/discovery lever.