Free shipping isn't free. Someone pays for it. The question is how you structure things so that "someone" isn't eating into your margins.
We tested a free shipping threshold strategy with a client and increased their average order value by 34% in 30 days. Here's exactly what we did.
The Setup
The client was a home goods brand with an average order value of $47. Shipping cost them about $8 per order on average. They were offering free shipping on everything, which meant they were eating $8 on every order.
On a $47 order with 40% margins, that $8 shipping cost was cutting their profit nearly in half.
The Strategy
We set a free shipping threshold at $65. That's roughly 40% above their current AOV. High enough to make a difference, low enough to feel achievable.
For orders under $65, we charged $6.99 flat rate shipping. Simple and predictable.
The Implementation
We added a progress bar to the cart showing how close they were to free shipping. "You're $18 away from free shipping!" That visual nudge is powerful.
We also added product recommendations in the cart focused on items in the $15-25 range. Easy add-ons that pushed people over the threshold.
The Results
Within 30 days:
- AOV increased from $47 to $63 (34% lift)
- 72% of orders qualified for free shipping
- Overall revenue increased 22%
- Profit per order actually increased despite "free" shipping
The math worked because people were adding $15-20 more to their carts to avoid $7 shipping. We gave away $8 in shipping but gained $15+ in margin.
Finding Your Threshold
The right threshold depends on your numbers. Here's how to find it:
- Look at your current AOV
- Set threshold 30-50% higher
- Make sure the margin on the additional purchase covers shipping
- Test and adjust based on data
If your AOV is $30, try $45. If it's $80, try $100-120. The sweet spot is high enough to increase value but low enough that people actually reach it.
Common Mistakes
Setting the threshold too high kills it. If your AOV is $40 and you set free shipping at $150, nobody will bother. They'll just pay for shipping or leave.
Not promoting it enough is another mistake. The threshold only works if people know about it. Put it in your header. Show it in the cart. Mention it in emails.
The Bottom Line
Free shipping is a tool, not a rule. Use it strategically to increase order values and protect your margins. The progress bar alone can be worth thousands in extra revenue per month.