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Free Shipping Threshold Calculator

Enter the shipping cost and gross margin to get the minimum order value.

How it is calculated

The tool finds the order value whose gross profit exactly equals the shipping you give away: minimum order = shipping cost ÷ (gross margin % ÷ 100). Shipping cost is what you pay the carrier per order, and gross margin % is the share of the selling price left after the cost of goods, entered as a plain number such as 30. At that order value the gross profit equals the shipping, so the free-shipping order just breaks even on the products' gross margin. Shipping cost may be zero or more; the margin must be above 0 and at most 100, otherwise no result is shown. Packaging, payment fees and returns are not included, so add them to the shipping cost if you want them covered.

Worked example

A parcel costs you 7.50 to ship and your gross margin is 30%. Minimum order = 7.50 ÷ (30 ÷ 100) = 7.50 ÷ 0.30 = $25.00. At a 25.00 order you earn 25 × 0.30 = 7.50 gross profit, exactly the shipping you pay. A free-shipping threshold above 25.00 leaves some profit after the carrier is paid.

Try this example →

Common mistakes

  • Entering margin as a decimal (0.3). The field is a percentage, so 0.3 means 0.3% and the threshold jumps to $2,500.00.
  • Confusing gross margin with markup. A 30% markup on cost is only about a 23% margin, and the tool expects the margin on the selling price.
  • Setting the threshold exactly at the result and calling it profitable. That is break-even on shipping; to earn a profit, set it higher.
  • Using the cheapest shipping rate when customers in distant zones cost far more, so the average cost per order is higher than the figure you entered.
  • Entering net profit margin instead of gross margin, which makes the threshold too high.

About this calculator

Offering "free" shipping doesn't remove the cost — it shifts who absorbs it, and this calculator finds the minimum order value at which that shift still leaves margin intact: threshold = shipping cost ÷ gross margin. The idea is that the extra items a customer adds to qualify generate enough gross profit to cover the shipping the store is giving away.

E-commerce operators use this threshold to set a "free shipping over $X" cutoff that boosts average order value without quietly eating into profit on every order. Set it too low and shipping erodes margin on small orders; set it too high and customers abandon carts instead of adding items.

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