Free shipping is margin math
Free shipping is not free. It is shipping wearing a marketing hat. The question is whether the threshold protects enough margin to justify the offer.
The formula
minimum_free_shipping_threshold = shipping_cost / (gross_margin_rate - desired_minimum_margin_rate)This only works when gross margin is higher than the desired margin after shipping. If your desired minimum margin is equal to or higher than gross margin, the math cannot save the offer.
Example
If average shipping costs $8.50, gross margin is 55%, and you want at least 35% margin left after shipping:
threshold = 8.50 / (0.55 - 0.35)
threshold = 42.50That means a threshold around $42.50 is the minimum needed to maintain the desired margin after covering shipping.
Compare threshold to AOV
If current AOV is already above the threshold, the offer may be easy to test. If current AOV is far below it, you need bundles, upsells, product mix changes, or a different shipping strategy.
Use the Free Shipping Threshold Calculator to run the numbers quickly.