Is this calculator specific to Shopify?

The math is ecommerce-specific and works especially well for Shopify stores because it includes the costs Shopify merchants usually need to model: COGS, payment fees, shipping, returns, ad spend, inventory, conversion rate, or repeat purchases depending on the tool.

Should I use gross margin or contribution margin?

Use contribution margin when you are making advertising, discount, or growth decisions. Gross margin is useful, but contribution margin is stricter because it accounts for variable costs like payment fees, fulfillment, shipping, returns, and app costs.

Why does the tool use default values?

Defaults make the calculator useful immediately and show the shape of the result before you enter your own numbers. Replace them with your store's actual numbers before making a final decision.

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Free Shipping Threshold Calculator

Find a profitable free shipping threshold based on AOV, gross margin, shipping cost, and current shipping charged.

Free shipping threshold calculator

Find the minimum threshold where the extra margin from a larger cart can pay for the shipping subsidy.

Current AOV

Gross margin

Average shipping cost

Shipping currently charged

Recommended threshold

$70.00

Minimum profitable

$67.09

Shipping subsidy

$5.00

Added revenue needed

$9.09

Profit at threshold

$1.60

Set the threshold above your current AOV, but not so high that most shoppers ignore it. A threshold around $70.00 gives the shipping bar a clear job: add one more item.

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About this tool

What this free tool calculates

Use this before adding a free shipping bar. It estimates how much extra cart value is needed to pay for the shipping subsidy.

How to use the result

The threshold is based on shipping subsidy divided by gross margin, then rounded up to a clean dollar amount above current AOV.

If the recommended threshold is too far above your current AOV, use bundles or cross-sells to make the extra cart value feel natural.

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Why the calculator stays input-driven

This free ecommerce tool does not guess demand, scrape competitors, or invent benchmarks. Change the numbers to match your store, then use the result to decide whether a product, campaign, discount, or inventory move is worth doing.

Frequently Asked Questions

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