Free shipping threshold: how to set one without losing money

Set the threshold where a free-shipping order leaves at least as much as today's order with paid shipping. In our example (one item for €24.90, shipping costs you €4.90) that is a basket of €32.96 – rounded up, free shipping from €35.00. Below that, every free-shipping order earns less than today.

Enter your price, your real shipping cost and your margin – then try different basket values.

Open the profit calculator

Why free shipping can cost you more than you think

When the customer pays shipping, the fee covers most of your carrier cost. With free shipping you pay the carrier yourself, so the money comes straight out of your profit per order. For cheap products this can be the whole profit.

A threshold (“free shipping from 40 €”) is a deal: you pay the shipping, the customer buys more. It only works if the extra products earn more than the shipping you give away. That is why the threshold depends on your own margin, not on what other shops do.

How to calculate your threshold – step by step

You need three numbers: what one typical order earns today, what shipping really costs you per parcel, and the margin of your products.

Calculate today's typical order with the shipping fee the customer pays. That is the amount you want to keep.
Calculate the same order without a shipping fee. The difference is what free shipping costs you per order.
Raise the basket value step by step (the calculator's selling price field) until the free-shipping order earns as much as today's order.
Round up to a number customers remember, for example to the next 5 or 10 €.
Check that a typical second product actually gets customers over the line. A threshold far above your usual basket rarely changes behaviour.

Cost of free shipping per order	contribution with shipping fee − contribution without shipping fee
Safe threshold	smallest basket value where contribution (free shipping) ≥ contribution today

What a free-shipping order leaves at different basket values

Same products, no shipping fee charged. For comparison: today's one-item order with €4.90 shipping paid by the customer leaves €7.64.

Basket value	Contribution with free shipping	Compared with today
€24.90	€3.83	−€3.81
€30.00	€6.24	−€1.40
€35.00	€8.61	+€0.96
€40.00	€10.97	+€3.33
€50.00	€15.70	+€8.06

Things the calculation cannot tell you

The threshold above is the safe minimum: it assumes the same number of orders as today. Free shipping may bring more orders – or customers who would have paid shipping anyway now get it for free. Neither effect can be calculated in advance. Test it: introduce the threshold, then compare the number of orders and your total contribution for a few weeks with the weeks before.

Worked examples: Example shop: item for €24.90, shipping costs you €4.90

Example values: purchase price €8.00 per item, payment fee 2 % + €0.30, €2.00 ads per order, 5 % returns at €5.00, 19 % VAT. Today the customer pays €4.90 shipping.

One item, customer pays shipping: €7.64
One item, free shipping: €3.83
Free shipping costs you per order: €3.81
Basket needed to earn the same with free shipping: €32.96
Threshold, rounded up: €35.00

Free shipping on every order would cost this shop €3.81 per order. From a basket of €35.00, free shipping no longer costs money compared with today.

Common mistakes and how to fix them

Copying the threshold of a big shop

Why it matters: Large shops pay lower carrier rates and often have higher margins. Their threshold can be a loss for you.

Fix: Calculate your own threshold from your shipping cost and your margin.

Setting the threshold just above a single product

Why it matters: If one product costs 39 € and free shipping starts at 40 €, customers add a cheap extra – you pay shipping for very little extra profit.

Fix: Check which products customers would add and whether they earn enough to pay for the parcel.

Forgetting the return cost

Why it matters: With free shipping, customers return more casually, and you may pay the return label too.

Fix: Enter your return rate and return cost per parcel in the calculator and watch both after the change.

Frequently asked questions

Is free shipping for all orders ever a good idea?

Only if your margin can carry the shipping cost on every order. Calculate one typical order without a shipping fee: if it still earns enough, you can afford it. If not, a threshold or a lower shipping fee is safer.

Should I add the shipping cost to my prices instead?

That is another way to pay for free shipping. Calculate the new price with the profit calculator – fees and VAT also apply to the higher price, so the increase is a little more than the shipping cost.

What if most orders contain only one item?

Then a threshold rarely changes much. Check first whether customers buy more than one product at all. If not, a fair shipping fee or a slightly higher price may work better.

Do I need to include VAT?

Yes, if you charge VAT: the shipping fee the customer pays contains VAT, so you keep less than the amount on the invoice. The calculator handles this for you.