Free online calculator
Free Shipping Threshold Calculator
Estimate the order value needed for gross profit to cover your shipping subsidy and a target profit amount.. Includes a worked example, formula and practical FAQs.
Formula: Threshold = (shipping cost + target order profit) ÷ gross margin rate
How to use the Free Shipping Threshold Calculator
Estimate the order value needed for gross profit to cover your shipping subsidy and a target profit amount.
Formula
Threshold = (shipping cost + target profit) ÷ (gross margin / 100).
Worked example
With $6 shipping cost, $4 target profit and 40% gross margin, the threshold is ($6 + $4) ÷ 0.40 = $25.
Interpretation and limitations
Gross margin must be positive. The model assumes the margin and shipping cost remain constant across order sizes; packaging, payment fees and other expenses need separate allowance if not included.
Free Shipping Threshold questions
Is the threshold my store’s ideal offer?
Not necessarily. Check average order value, conversion behavior and costs across real baskets before choosing a policy.
Why use margin instead of markup?
The denominator describes the fraction of order revenue available to cover shipping and profit. Markup uses a different cost base.
Continue your calculation
For the next step, use the Shipping Cost Per Order Calculator or the Average Order Value Calculator. Review each tool’s input definitions before carrying a result into another calculation.
Frequently asked questions
Is this calculator free?
Yes. It runs in your browser and does not require an account.
How should I use the result?
Use the result as a planning estimate and verify business-critical decisions against your source records.