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A free shipping threshold should usually sit above current average order value, but not so high that customers ignore it.
Example one: AOV is $58, gross margin is 42%, shipping cost is $7.50, and the store wants $5 in extra profit. The extra order value needed is ($7.50 + $5) / 42%, or $29.76. A practical threshold is about $87.76.
Example two: AOV is $35, margin is 30%, and shipping costs $6. A low threshold such as $39 may not create enough extra gross profit. A threshold closer to $55 can be safer if customers naturally add one more item.
Use the Free Shipping Threshold Calculator at /tools/free-shipping-threshold-calculator, then compare the result with the Shipping Cost Calculator at /tools/shipping-cost-calculator and the AOV Calculator at /tools/aov-calculator.
Free shipping threshold examples for ecommerce stores
Use simple examples to understand how free shipping thresholds affect AOV, margin, and shipping cost.
Example one: AOV is $58, gross margin is 42%, shipping cost is $7.50, and the store wants $5 in extra profit. The extra order value needed is ($7.50 + $5) / 42%, or $29.76. A practical threshold is about $87.76.
Example two: AOV is $35, margin is 30%, and shipping costs $6. A low threshold such as $39 may not create enough extra gross profit. A threshold closer to $55 can be safer if customers naturally add one more item.
Use the Free Shipping Threshold Calculator at /tools/free-shipping-threshold-calculator, then compare the result with the Shipping Cost Calculator at /tools/shipping-cost-calculator and the AOV Calculator at /tools/aov-calculator.
Free Shipping
AOV
Shipping Cost
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