Free Shipping Threshold Math

Free shipping thresholds are the most reliable AOV lever there is, and most stores set the number by copying a competitor. It deserves five minutes of arithmetic.

Start with the distribution, not the average

Your AOV is an average, and averages hide the shape. Export ninety days of orders and plot order values in £10 bands. What you want is the band where orders cluster.

Most stores find a peak just above their single-product price, with a long tail. The threshold goes above the peak, within reach of it.

The rule of thumb

Set the threshold at 15-25% above current AOV.

• AOV £40 → threshold £48-50
• AOV £65 → threshold £75-80
• AOV £120 → threshold £140-150

The logic: it must be close enough that adding one typical item gets there. If your average item is £25 and your AOV is £40, a £50 threshold is one item away. A £90 threshold is two items away and most people will not bother.

Check it against margin

The threshold only works if you can absorb the shipping on orders at that level.

Take an order at the threshold. Subtract COGS, subtract your actual shipping cost, subtract payment processing. If what remains is less than what you make on a below-threshold order, the threshold is too low.

Worked example: threshold £55, gross margin 55%, shipping cost £5.50.

• Revenue £55, COGS £24.75, gross £30.25
• Less shipping £5.50 → £24.75
• Less processing (~2%) £1.10 → £23.65 contribution

Compare to a £40 order with £4.95 shipping charged:

• Revenue £44.95, COGS £18, shipping cost £5.50, processing £0.90 → £20.55 contribution

The threshold order is worth more. It works. Run the same two lines with your numbers before you commit.

Show the progress, live

Setting the threshold is half the work. The other half is UI, and it is where most of the lift comes from.

In the cart drawer, at all times:

£12.00 away from free shipping [progress bar]

And when they cross it:

Free shipping unlocked

Two details that matter:

Update it live as items are added, without a page reload. The moment of feedback is the moment of motivation.

Show it on the product page too, at least as a static line — "Free shipping over £55". The customer should know the rule before they start filling the cart, not discover it at the end.

Suggest what closes the gap

The strongest version adds a suggestion: if the shopper is £12 short, show two or three items between £12 and £18 that would qualify them.

This converts well because the customer has already decided to spend; you are answering "on what". Keep the suggestions relevant to the cart contents — random best sellers convert far worse than complements.

When not to use a threshold

Very low AOV, low margin. If AOV is £18 with 35% margin, the arithmetic does not work at any threshold. Charge flat-rate shipping and be clear about it.

Heavy or bulky goods. If shipping is £30, a threshold implies a very high order value. Better to price shipping into the product and advertise free shipping outright.

Genuinely free shipping already. If you have absorbed shipping across the board, that is a different strategy and it is fine — you have priced it in. Do not reintroduce a threshold to create urgency you do not need.

Revisit it quarterly

The threshold is set relative to AOV, and AOV moves. If the threshold works, AOV rises, and the threshold becomes too easy — at which point you are giving away shipping on orders that would have happened anyway.

Diary it. Check the distribution every quarter, and step the threshold up when the peak has moved past it.