Free shipping threshold: how to set it from your order data, and check that it pays
The obvious free shipping threshold, a little above your average order, can be the one that costs you the most. This post sets the number from where your orders cluster, works out the break-even, compares a threshold with a flat rate and with free shipping on everything, and covers bundles and the FTC's guide on free offers.
On this page
- Step 1: find where your orders cluster
- Step 2: work out what a free shipping threshold costs and earns
- Step 3: compare thresholds before you pick one
- Step 4: test the threshold by contribution per visitor
- Free shipping on bundles: the threshold in a one-product funnel
- How to advertise free shipping honestly
- Before you switch on a threshold
- Frequently asked questions
Set a free shipping threshold just above the order size most of your buyers already reach, so that one sensible addition gets them over it: another product, or the next bundle. Then check the math. Every order that already qualified stops paying for shipping, so the threshold pays only if enough buyers add an item that earns more than the shipping you give away.
Step 1: find where your orders cluster
Start with your own orders, not a number from another store. Export the last 90 days, take each order's merchandise value before shipping and tax, and count how many orders fall at each amount. Look for the clusters: one item, one item plus a small add-on, two items.
Here's an illustrative store, used for the rest of this post. It sells four supplements at $35 each and a $15 travel pack, charges $5.95 shipping on every order and pays $8 to pick, pack and send one. After product cost, payment fees and refunds, 60% of merchandise revenue is left. To keep the math readable, the payment fee on the shipping charge is ignored. In the last 90 days the store took 4,000 orders, and they cluster like this:
Orders by value over 90 days
Illustrative store: 4,000 orders, merchandise value before shipping
Read three things off a chart like this:
- The main cluster. Here, 60% of orders are a single $35 product. A threshold works on these buyers or it doesn't work.
- What already qualifies. Every order at or above the threshold ships free without the buyer changing anything. At $70 that's 800 orders; at $50 it's 1,600.
- The gap. The distance from the main cluster to the threshold should be about the price of one thing a buyer would really add. From $35, a $70 threshold is exactly one more product.
Use enough orders for the clusters to be real. If 90 days gives you only a few hundred, take six months, and leave out the weeks of any unusual promotion.
Average order value hides all of this. This store's average order is $47.20, and a threshold "a little above AOV" at $50 turns out to be the expensive choice, as step 3 shows.
Step 2: work out what a free shipping threshold costs and earns
A threshold moves money in two directions.
The cost: every order that already reached the threshold stops paying for shipping. At $5.95 an order, the 800 orders of $70 or more give up $4,760 in 90 days, and you get nothing back for it.
The gain: a buyer who adds an item to qualify brings that item's contribution, minus the shipping fee they no longer pay. A second $35 product leaves $21.00, so a buyer who moves from one product to two is worth $15.05 more than before:
A buyer who adds a product to reach $70
Illustrative: contribution per order after shipping
Put the two sides together and you have the number of buyers who must move up for the threshold to break even:
How many buyers must move up
Shipping given awayorders that already qualify × the shipping fee
Gain per buyer who moves upcontribution of the cheapest item that gets them over − the shipping fee
Buyers needed to break evenshipping given away ÷ gain per buyer who moves up
Illustrative, at a $70 threshold: 800 × $5.95 = $4,760 given away. A second $35 product leaves $21.00, so each buyer who moves up gains $21.00 − $5.95 = $15.05. Break-even: $4,760 ÷ $15.05 = 317 buyers, out of the 3,200 orders below $70.
The gain per buyer decides most of it. If the cheapest item that gets a buyer over the line leaves less than the shipping fee, no number of buyers makes the threshold pay. If it leaves only a little more, you'll need more buyers than you have. One adjustment: if two items cost you more to ship than one, take the difference off the item's contribution before you divide.
Step 3: compare thresholds before you pick one
Run the formula for each candidate. For the example store:
- At $50, 1,600 orders already qualify, so the store gives away $9,520 of shipping. The cheapest way over the line is the $15 travel pack, which leaves $9.00, only $3.05 more than the fee. Breaking even would take 3,122 buyers moving up, and only 2,400 orders sit below $50. It can't pay unless free shipping also brings in a lot of new buyers.
- At $70, 800 orders qualify and $4,760 goes out. The cheapest way over is a second product, worth $15.05 for each buyer who moves. It needs 317 buyers, about one in ten of the 3,200 orders below $70.
- At $85, only 320 orders qualify, so just $1,904 goes out. But the two-product buyers nearest the line can reach it with the travel pack, which clears the fee by only $3.05, and a one-product buyer would have to add $50 of products to get there. A gap that wide asks a lot.
So $70 is the threshold worth testing: the main cluster is one product away, and the item that carries buyers over earns well above the fee. Whether one buyer in ten below $70 will add a product is the question only a test answers.
Remember the $50 case. A cheap add-on makes a low threshold easy to reach, and that's exactly why it struggles to pay: buyers reach the threshold with the item that leaves you the least.
Threshold, flat rate or free shipping on everything?
A threshold isn't the only option, and the same numbers tell you when another policy fits better. Two or three questions about your orders settle it:
Threshold, flat rate or free shipping on everything?
Two or three questions about your orders
How do your orders spread?
Does your single unit make money after the ad cost?
Can one item carry a typical order over a threshold and leave comfortably more than the shipping fee?
Check it with the break-even formula above.
Is shipping a small cost next to what a typical order leaves?
Best fit
A free shipping threshold
Your orders spread across products and amounts, and one item can carry a typical order over the line while leaving comfortably more than the shipping fee. Set the threshold one such item above your main cluster, check the break-even, and test it by contribution per visitor.
Best fit
Free shipping on every order
Either every tier of your one-product offer makes money after the ad cost, or your orders spread, no add-on clears the fee and shipping is small next to what an order leaves. One simple promise beats a fee. Fund it from margin, not from a price rise.
Best fit
Free shipping on bundles, a fee on the single
You sell one product in bundle sizes and the single unit loses money after the ad cost. A fee on the single makes it less unprofitable, and free shipping on the bundles gives buyers a reason to step up: the bundles are your threshold.
Read more: Bundle Pricing: How to Price 1, 3 and 6-Bottle Offers
Best fit
A flat rate on every order
Your orders spread, no add-on clears the shipping fee by enough, and shipping is a large cost next to what an order leaves. A flat rate is honest and predictable. Look at a threshold again when your catalog or prices change.
Free shipping on everything is the simplest promise, and the most expensive one to switch on. For the example store it would give up $5.95 on all 4,000 orders, $23,800 a quarter. A new order at the average of $47.20 leaves $20.32 once the store pays the $8 of shipping, so free shipping on everything breaks even only if it brings in about 1,170 more orders, 29% more than today. That's a big bet to make on instinct.
A flat rate is the opposite trade: nothing given away, one number on every order, and no reason for buyers to add anything. It suits thin margins and catalogs where no item clears the fee by enough. If shipping costs vary a lot by destination, run the threshold math per zone, or offer free shipping only where it pays and say so next to the threshold.
Step 4: test the threshold by contribution per visitor
A threshold can change more than order size. The free-shipping message can win buyers who would have left at checkout, and a shipping fee on smaller orders can lose some. So judge it the way you'd judge a price change: contribution after shipping, divided by visitors. Ad cost per visitor is the same on both sides of a fair test, so the version with more contribution per visitor also makes more profit.
The clean way is a split: half your visitors see the threshold and half see your current terms, each visitor kept on one version, both running over the same full weeks. If your checkout can't show two shipping policies at once, a before-and-after comparison is the fallback. It mixes the threshold with everything else that changed in those weeks, so run it longer and read it with caution. Either way, count refunds after the guarantee window has closed on the last orders.
Beyond contribution per visitor, watch three things while the test runs: the share of orders landing just above the threshold, which shows buyers reaching for it; refunds and returns on the items added to qualify; and whether the main cluster's conversion rate moved.
Free shipping on bundles: the threshold in a one-product funnel
A VSL funnel that sells one product in one-, three- and six-bottle packs doesn't have a spread of order values. It has three. The threshold question becomes: which tier ships free?
One answer is free shipping on the bundles and a fee on the single bottle, and it does two jobs. In a bundle ladder the single-bottle order can lose money once you've paid for the ad that brought the buyer, and the fee makes it a little less unprofitable. Free shipping on the three-pack, meanwhile, gives buyers a concrete reason to step up, which is what a threshold does in a store.
Say the single sells at $49 and the three-pack at $129, a bottle costs $5 landed, fees take 4% and refunds 6% of revenue, and each order costs $8 to ship. With the same simplified math as above, here's what each order leaves after shipping, before the ad:
What each order leaves in a one-product funnel
Illustrative: after shipping, before the ad cost
The fee adds $5.95 to a single order. A buyer who steps up to the three-pack adds $56.05, so most of the money is in the step-up, not the fee. The risk runs the other way too: some cold visitors may leave rather than pay a fee. That's why it's a test, not a rule. The bundle pricing post covers the tiers themselves, and how to increase average order value puts the threshold next to the other levers.
How to advertise free shipping honestly
The FTC's guide on the word "free" is written for offers of something free with a purchase, and two of its points are worth applying to a threshold (16 CFR Part 251). This is a summary of the guide, not legal advice:
- State the condition at the outset. The guide says all the terms, conditions and obligations of a free offer should be set forth clearly and conspicuously at the outset of the offer. For a threshold, that means "Free shipping on orders of $70 or more" next to the prices, not a surprise at checkout.
- Don't pay for it with a price rise. Under the guide, buyers can assume you won't recover the cost of the free item by marking up the price of what they must buy, and a regular price is one you've openly and actively sold at for a reasonably substantial period, a 30-day period. Raising product prices on the day free shipping starts is the move it warns against. Fund the threshold from margin, which is what the math above is for.
A few habits keep the wording honest in practice:
- Use the same threshold everywhere: the ad, the video, the offer block, the cart and the confirmation email.
- If some orders are excluded, such as certain destinations, say so in the same place as the threshold.
- Don't add a "handling" charge to a free-shipping order. Buyers will read it as the shipping fee under another name.
- If the cart shows how much is left to qualify, make sure the number is right to the cent.
On a VSL page, the offer appears when the presenter reveals the price, so put the shipping terms in the offer block itself, next to each price. In RevvyScales the timed pitch reveal keeps offers, the guarantee and the CTA button hidden until the pitch second you set, so the condition shows up together with the prices it applies to (player conversion features). How to present the whole offer inside the script is in the VSL offer guide. The opposite model, a product given away for the price of shipping, has its own math and rules in free plus shipping.
Before you switch on a threshold
Whichever policy you choose, the number that decides it stays the same: contribution per visitor after shipping. The contribution margin post shows how to put shipping into that number, both what you pay and what you charge. Then work through these in order, starting from your own orders:
Before you switch on a threshold
0 of 8 done
Frequently asked questions
What is a good free shipping threshold?
There's no universal number, and a threshold copied from another store can lose money in yours. A good one sits just above the order size most of your buyers already reach, can be reached with one sensible addition, and brings in more from the buyers who move up than it gives away on orders that already qualified. Work it out from your own last 90 days of orders.
Should the free shipping threshold be above average order value?
Set it above the main cluster of your orders, which isn't the same thing. Average order value blends small and large orders, so a threshold a little above it can already cover many orders that would have paid for shipping anyway. Chart your orders by value, find where most of them sit, and set the threshold one sensible addition above that.
Does free shipping increase conversion rate?
It can, and it can also cost more than it brings. Free shipping removes a charge some buyers drop out over, but a threshold also puts a fee on orders below it if you charged none before. The only reliable answer for your store comes from a split test that compares contribution per visitor, not conversion rate alone, over full weeks.
Can I raise prices to cover free shipping?
Your prices are yours to set, but don't raise them on the day you start advertising free shipping and call the shipping free. The FTC's guide on free offers says buyers can assume the cost of a free item isn't recovered by marking up what they must buy, and it describes a regular price as one sold openly for a 30-day period. Fund free shipping from margin instead.
How do I show a free shipping threshold on a VSL page?
Put it in the offer block, next to each price, so it appears at the same moment as the prices it applies to, and repeat it in the cart and the confirmation email. The FTC's guide on free offers says the conditions should be stated clearly and conspicuously at the outset of the offer, which on a VSL page means when the offer is revealed, not first at checkout.