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Does free shipping pay off?

Find out whether offering free shipping, on all orders or above a minimum order value, increases your store’s profit. The calculator shows how much conversion or average order value must rise to pay for shipping and compares profit before and after.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Oct 31, 2026

Example values for one month. Average shipping is what the store pays per order when the customer does not.

The offer

With a minimum order value, some customers add items to the cart to qualify: the average order value goes up. E-commerce surveys often point to shipping costs as the main reason for cart abandonment.

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—Extra profit per month with free shipping
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Profit by conversion lift

Sales margin minus shipping paid by the store, at the expected order value. The dashed line is today’s profit.

Tap the chart to see the values.

Profit by conversion and order value lift

Change in monthly profit compared with today. Green: free shipping pays off.

Before and after

The summary lists your inputs, results, formulas, assumptions and sources. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and sources

Formulas

Today: orders = visits × conversion; profit = orders × order value × margin (the customer pays shipping)
With free shipping: orders = visits × conversion × (1 + lift); profit = orders × new order value × margin − free-shipping orders × average shipping
Break-even lift: the increase that makes the new profit equal today’s

Assumptions and limits

  • Educational simulation. With a minimum order value, only orders above it get free shipping. It ignores customers who start buying more often and shipping built into prices.
  • Customer response to free shipping varies by product and region. Test with part of your audience before rolling it out to everyone.

Official sources and references

Frequently asked questions

What does this calculator show?

Whether offering free shipping, on all orders or above a minimum order value, raises the store’s monthly profit. It compares today’s profit with the profit after the offer and shows the conversion lift needed to break even.

Where do I get each number?

Visits, conversion rate and average order value come from your store platform or analytics tool. The contribution margin is the average share of revenue left after product cost, payment fees and other variable costs. Average shipping cost is what you pay the carrier per order.

How do I read the default example?

Today the store gets 500 orders and $14,250 of profit. With free shipping above $99 for 45% of orders, a 15% conversion lift and a $85 order value, it would get 575 orders, pay $2,070 in shipping and make $16,503: $2,253 more per month. Free shipping pays off even with no conversion lift, because the higher $85 order value already covers the shipping cost.

Should free shipping apply to all orders?

Free shipping on all orders has the strongest effect on conversion, but it can turn small orders into losses. A minimum order value protects the margin and encourages customers to add items. Set the minimum a little above today’s average order.

How sure can I be about the conversion lift?

Not very: it is the most uncertain assumption. Run a test with part of your traffic or for a few weeks, measure conversion and order value, and compare them with the break-even lift shown on the page before rolling out free shipping to everyone.

Should I build shipping into my prices?

It is an option: raise prices slightly to cover part of the shipping and advertise free shipping. It works best for products that are hard to compare on price. For heavily compared products, higher prices can hurt conversion; test both approaches.

What does the calculator leave out?

Repeat purchases, returns, the effect on customer reviews and shipping costs that vary by region or package size. Fixed costs are left out because they do not change with the offer.

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Does free shipping pay off? How to run the numbers

Free shipping is one of the strongest levers in e-commerce: shipping costs are among the top reasons shoppers abandon their carts. But shipping does not disappear; it moves from the customer to the store. The offer only pays off if it brings enough extra orders or larger orders to cover the cost.

The calculation

Profit today = orders × order value × contribution margin (the customer pays shipping).

Profit with free shipping = new orders × new order value × margin − orders that qualify × average shipping cost.

The break-even conversion lift is the increase in orders that makes both profits equal.

All orders or above a minimum?

  • On all orders: the strongest effect on conversion, but small orders may become unprofitable.
  • Above a minimum value: protects the margin and nudges customers to add items to reach the minimum, raising the average order value. Set the minimum a little above today’s average order.

Test before rolling out

The reaction to free shipping varies by product, price and region. Run a test with part of your traffic or for a limited period, measure conversion and order value, and only then decide. Also consider building part of the shipping cost into prices.