- Set the threshold above your average order value, by at least the shipping cost per parcel divided by your gross margin rate. That is the break-even gap.
- Shipping is the top reason for abandoned carts: 40% of shoppers named extra costs that were too high (Baymard Institute, US shoppers). The average abandonment rate is 70.22%.
- The five steps: average order value, margin and shipping cost, threshold, display, A/B test. The example table uses invented values and is not a benchmark.
- Every rule of thumb for “how far above the AOV” is a hypothesis until your own experiment confirms it.
Set your free shipping threshold above your average order value, by at least the amount that pays for the shipping: the shipping cost per parcel divided by your gross margin rate. Show the threshold where buyers decide, then run an A/B test with two values to find the one that earns more.
This guide walks through the calculation in five steps. Step 1 starts from your average order value. Step 2 calculates margin and shipping cost per order, with an example table that uses invented numbers. Step 3 sets the threshold. Step 4 shows it in a bar, in the cart and in the checkout. Step 5 tests two thresholds against each other.
Why shipping costs decide purchases
Shipping is the most common reason buyers leave. In the Baymard Institute list of cart abandonment reasons (US shoppers, retrieved October 20, 2026), 40% of shoppers who abandoned a cart said the extra costs were too high: shipping, tax and fees. Another 20% said delivery was too slow, and 12% could not see the total cost up front. The same source reports an average abandonment rate of 70.22%. For the other causes and for winning buyers back, see our guide to abandoned cart best practices.
A free shipping threshold addresses that reason and still protects your margin. Buyers see a clear goal, and you decide at which order value shipping becomes free. The rest of this guide shows how to find that value in five steps. It starts from your own numbers and ends with an A/B test that checks your answer.
Step 1: start from your current average order value
The average order value (AOV) is revenue divided by the number of orders in a period. Take it from your shop system or from GA4. Use at least a few months, and exclude outliers such as a single bulk order.
The average hides the spread. Export the order values and look at the distribution: how many orders fall in each band of ten or twenty currency units, and how many sit just below a threshold you are considering? A threshold that few buyers can reach with one more item changes little. A threshold that most orders already exceed gives away shipping on orders that would have come anyway.
Write down three numbers before you continue: the AOV, the share of orders below it and the number of orders per month. You need them again in step 5 to plan the experiment.
Step 2: calculate margin and shipping cost per order
Free shipping is paid from your margin. Find out two figures:
- Gross margin rate on a typical order: the part of the revenue that remains after the cost of goods.
- Shipping cost per parcel that you pay: the carrier invoice divided by the number of parcels, including packaging if you want the full picture.
Also note how much you collect in shipping fees today. When you introduce a threshold, buyers who already order above it stop paying that fee, and this income drops.
The table shows the calculation with invented numbers. It is an example, so replace every value with your own.
| Line | Calculation | Example value |
|---|---|---|
| Average order value (AOV) | Revenue ÷ number of orders | 50 |
| Gross margin rate | Margin ÷ revenue | 40% |
| Shipping cost per parcel you pay | Carrier invoice ÷ parcels | 5 |
| Break-even gap | Shipping cost ÷ margin rate = 5 ÷ 0.40 | 12.50 |
| Lowest sensible threshold | AOV + break-even gap = 50 + 12.50 | 62.50 |
| Thresholds to test | Round up to values buyers can remember | 65 and 75 |
Example with invented values in your shop currency. Replace every number with your own data. It is not a benchmark.
The break-even gap answers one question: how much extra order value must a buyer add, so the extra margin pays for the shipping you now cover? With a margin rate of 40% and a parcel cost of 5, an extra order value of 12.50 brings 5 of margin.
Step 3: set the threshold above your average order value
Set the threshold above your AOV. A buyer with an average basket then has a reason to add one more item. Set it by at least the break-even gap from step 2, so the extra items pay for the shipping. The threshold is one of several ways to raise the order value, and our guide on how to increase average order value covers the others.
How far above the AOV is the right distance? There is no number with a reliable source. Hypothesis: a threshold slightly above the AOV, within reach of a typical buyer with one more item, works better than a threshold far above it. Treat any percentage you read elsewhere as a hypothesis too, unless it names a source and a shop type like yours. Your own experiment gives the answer.
Three checks help before you decide:
- Reachability. Look at your product prices. Can a buyer close the gap with one item from your range, or does the gap need two or three?
- Cheapest item. The threshold should be higher than your cheapest product. Otherwise every single-item order ships free.
- Delivery regions. If foreign parcels cost more, a single threshold may be too low for them. Consider one threshold per delivery zone.
Round to a value buyers can remember. Pick two or three candidate values, not one. You test them in step 5. Setting the threshold for a sale with reduced prices? Our guide to Black Friday average order value has an example calculation for it.
Step 4: show the threshold
A threshold nobody sees does nothing. Show it in places buyers look at while they decide:
- A bar on every page. A sticky bar at the top or bottom of the screen with one short sentence and the amount.
- A progress bar in the cart. A line that says how much is missing to reach free shipping, which updates when the buyer adds an item.
- The product page. A note near the price with the threshold, so the buyer knows before the cart.
- The checkout. A reminder that free shipping is applied.
This also touches the second reason in the Baymard list, the total cost that is not visible up front (12%). A clearly displayed threshold is one more place where the shipping cost is stated early.
With Varify, the Campaign Booster Information Bar shows the threshold as a fixed bar, with icons and a timing you set. See the Information Bar guide. The bar is a ready-made element, so you set it up without a developer.
Step 5: test two thresholds against each other
The calculation gives you candidates. An A/B test shows which one earns more. Send half of the visitors to a version with the first threshold and half to a version with the second, and compare the results over the same period.
- Goals. Use average order value and revenue as the main goals, and completed purchases as a check. A threshold can raise the AOV and still lower the number of orders, and only the combination tells you whether it paid off.
- Consistency. The message and the real shipping rule must match in every variation. If the bar says 65 and the checkout charges shipping at 60, buyers lose trust.
- Runtime. Plan with the free test runtime calculator before you start, and run the experiment over full weeks.
With Varify. With Prompt-Based Experimentation (PBX), you describe the message, the bar and the cart note of each variation in plain language, and the AI builds them without a developer. See the PBX examples. Varify sets no cookies and reads the results from your analytics tool, for example GA4. On Shopify, the average order value, revenue and purchases can be imported as goals directly, and the documentation shows how to test shipping costs in Shopify with a hidden variation filter and a separate shipping profile. On Shopify Plus, the Varify Checkout A/B Test app adds a free shipping threshold to the checkout without code.
Test your free shipping threshold with real orders.
Varify.io: PBX, Information Bar and goals for average order value and revenue.