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Free Shipping Threshold Calculator

Find the minimum order value that covers seller-paid shipping and handling while keeping your target contribution margin.

How the calculation works

Minimum order value = (shipping + handling) ÷ (1 − product cost share − fee share − target margin). The threshold rounds up to the nearest cent so the target margin is met.

Worked example

Product cost of 40%, fees of 10%, target contribution margin of 20%, $6 shipping and $2 handling require at least $26.67 per order. That leaves about $5.34 in contribution profit before excluded costs.

Assumptions and limits

Product cost and fees are constant shares of order value. Shipping and handling are fixed per order; overweight parcels, zones and shipping tiers may change them.

Include advertising or other percentage costs in the cost shares when appropriate. Otherwise those costs, returns, taxes and monthly overhead remain excluded.

This finds an arithmetic threshold. It does not predict conversion, basket size or whether offering free shipping will increase total profit.

Your numbers are processed in this browser. Changing currency does not convert them. These are estimates from your assumptions; check actual costs and settlement statements.

Frequently asked questions

How do I choose a profitable free-shipping minimum?

Enter product cost and fees as shares of order value, your target contribution margin, and fixed shipping and handling costs. The result is the smallest order value that meets those assumptions, rounded up to cents. It is a starting point for pricing, not a prediction of customer behavior.

Why is there no feasible free-shipping threshold?

If product cost share, fee share and target margin together reach 100%, no positive share of order value remains to cover shipping and handling. Change the cost assumptions or margin target before a threshold can be calculated.

Does a higher free-shipping threshold always increase profit?

No. Customers may abandon an order or add different products with different margins. This calculator does not forecast conversion or basket changes. Compare actual contribution profit across orders when testing a threshold.

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