Free shipping threshold calculator
Estimate the extra basket value needed to cover a shipping subsidy. Then compare a public free shipping offer with a member-only offer using your own qualification assumptions.
Calculate shipping scenariosYour shipping assumptions
All amounts are USD. Defaults are fictional examples. The target estimates cost cover, not an optimal threshold or a guaranteed change in behavior.
Cost-cover basket target
Baseline AOV plus required basket increase
Calculating…
Rounded up to the next cent. No assumed 25% uplift or automatic $5 rounding.
- Extra basket revenue needed to cover the subsidy
- Calculating…
Monthly extra shipping subsidy comparison
| Metric | Public offer | Members only |
|---|---|---|
| Expected qualifying orders | Calculating… | Calculating… |
| Monthly extra shipping subsidy | Calculating… | Calculating… |
Public cost minus member-only cost
Calculating…
A scenario difference, not guaranteed savings. A negative result means the member-only scenario costs more under these assumptions.
Qualification percentages are entered separately. The target does not automatically change them. Membership revenue, other benefit costs and changes in order volume or conversion are excluded.
Free shipping threshold formula
Required extra basket revenue = extra shipping subsidy ÷ contribution margin as a decimal. Cost-cover basket target = baseline AOV + required extra basket revenue. A positive subsidy requires positive contribution margin.
This estimates the basket growth needed to preserve the baseline order’s contribution after absorbing the extra subsidy. It assumes the added items earn the entered margin and do not increase shipping costs. It does not prove customers will add those items.
- Public qualifying orders = monthly orders × public qualification rate.
- Member qualifying orders = monthly orders × member order share × member qualification rate.
- Monthly extra subsidy = qualifying orders × extra subsidy per order.
- Cost difference = public extra subsidy − member-only extra subsidy.
Percentages are converted to decimals. Expected order counts may be fractional. Calculations use unrounded values; monetary results are displayed to cents.
Worked free shipping example
A fictional store has a $65 merchandise AOV, a 40% contribution margin before the extra shipping subsidy, and an $8 subsidy per qualifying order. It needs $8 ÷ 0.40 = $20 of extra basket revenue, giving an $85 cost-cover target.
With 500 monthly orders and 60% qualifying under a public offer, the extra subsidy is 300 × $8 = $2,400. If members place 20% of all orders and every member order qualifies, the member-only scenario costs 100 × $8 = $800. The difference is $1,600 under the entered assumptions.
Those qualification rates are illustrative inputs, not estimates derived from the $85 target. The model does not predict membership sales, conversion changes or total program profit.
Use contribution margin and the additional subsidy
Gross margin based only on product costs may leave out payment fees, packaging and other variable expenses. Use the contribution left after those costs, before the extra subsidy. If extra products have lower margins or make packages heavier, model that explicitly rather than applying a store-wide average blindly.
For example, if a carrier charges $8 and customers previously paid $8, offering free delivery means absorbing $8. If customers previously paid $5 and you already absorbed $3, the additional subsidy is $5, assuming the existing $3 remains in the baseline economics. Do not count the same shipping cost in both margin and the extra subsidy.
If shipping costs vary materially by destination, weight or service, run separate scenarios. A blended estimate may hide expensive orders. The AOV calculator can help establish the starting merchandise value.
Choose a policy using actual order data
AOV alone cannot tell you how many orders clear a threshold. Review the distribution of basket values and shipping costs, then enter a qualification estimate for each policy. Orders that already exceed the threshold receive a subsidy without necessarily generating extra basket revenue.
Test practical thresholds and monitor conversion, average order value and contribution after shipping. A lower qualification rate may reduce shipping spend while also reducing purchases. Holding order volume constant makes the comparison easy to understand, but it is a planning assumption.
Compare a member shipping benefit
Memberply lets Shopify merchants configure shipping benefits for eligible members. Include the full benefit mix and member purchasing behavior before choosing a public or member-only offer. Restricting eligibility does not automatically make a program profitable.
Use the membership discount calculator for discount margin effects, or the loyalty ROI calculator for incremental contribution and costs. Keep the cost definitions consistent and avoid adding overlapping results.
Explore Memberply on ShopifyFree shipping threshold questions
How do you calculate a free shipping threshold?
This planning model adds shipping subsidy divided by contribution margin to your baseline average order value. For $65 AOV, an $8 subsidy and 40% contribution margin, the required extra basket value is $20 and the cost-cover basket target is $85.
Which margin should I enter?
Use contribution margin after product costs, payment fees and other variable order costs, but before the shipping subsidy entered separately. Use the expected margin on the extra products added to the basket. Gross margin based only on product costs can overstate the amount available to cover shipping.
What does shipping subsidy mean here?
It is the additional shipping cost or lost shipping income your store absorbs per qualifying order compared with your baseline. If customers previously covered delivery, enter the amount you now absorb. If the store already subsidizes delivery, enter only the additional amount and keep baseline costs consistent.
Does the target guarantee higher profit or larger baskets?
No. It assumes customers add enough merchandise at the entered contribution margin and that shipping costs do not rise. Some orders already qualify, others will not grow, and conversion may change. Test actual order values, contribution and conversion before treating the target as a policy.
How are qualifying orders calculated?
The public scenario uses all monthly orders multiplied by the public qualification percentage. The member scenario uses monthly orders multiplied by the member share and the qualification percentage within member orders. These percentages are your assumptions; the calculator cannot infer them from AOV.
What if the contribution margin is zero?
A positive shipping subsidy cannot be covered by extra basket revenue at zero contribution margin, so there is no finite cost-cover target. If the subsidy is zero, no additional basket value is needed and the target equals the baseline AOV.
Are the monthly cost differences guaranteed savings?
No. They compare the extra subsidy on assumed qualifying orders at unchanged order volume. They exclude membership fees, other benefit costs and changes in conversion or customer behavior. The difference can be negative if more orders qualify in the member scenario.
Choose your next order-value test
Explore how to increase average order value on Shopify, with basket examples, shipping costs and checks for contribution after discounts.