If your free shipping threshold is higher than what customers spend, it's probably not an efficient lever.

Last week, I spoke with a founder whose free shipping threshold was set at $65.

But their new customer AOV?

$55.

Almost nobody was willing to add another $10 just to hit it.

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With another brand it was the other way around.

The free shipping threshold was so low, that everyone would hit it automatically.

And no one had any incentive to buy more products.

For both brands, the “free shipping” banner was just taking up space. And not improving their AOV.

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Here’s the truth:

You don’t “pick” a free shipping threshold.

You calculate it, then test it. Just like a price change.

The winner is whatever gives you the most profit, not the happiest gut feeling.

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Here’s the play I’d run (and you can do this in 15 minutes):

1. Get your baseline numbers:

• Pull your last 60–90 days:
  • Average order value (AOV)
  • Gross margin % (after product + packaging, before shipping)
  • Average shipping cost you pay (by zone, including packaging/surcharges)
  • What you currently charge for shipping (if anything)
  • Conversion rate
• Calculate your baseline profit per order:
  Profit/order = AOV × gross margin% + shipping revenue collected – shipping cost – payment fees

2. Pick 3–4 candidate thresholds:

• Use your current AOV as the anchor:
  • T1: AOV (or AOV + 10%)
  • T2: AOV + 20%
  • T3: AOV + 30–40%
• If your products are heavy or shipping is expensive, bias thresholds toward multi-item carts (e.g. “2-pack” or “3 items”) so one free shipment is funded by multiple units of margin.

3. Model profit for each threshold:

• Build a simple table:
  • Columns: Threshold, Sessions, Conversion rate, AOV, Orders, Gross margin $, Shipping cost $, Shipping charged to customer, Profit/order, Total profit (orders × profit/order)
  • Rows: Control + each threshold
• Use your best guesses:
  • Assume free shipping bumps AOV (basket building)
  • Assume conversion moves a bit (up or down) at each threshold
• The goal: maximize (conversion rate × gross profit), not just sales volume.

4. Live test it:

• Run a real test for 2–4 weeks:
  • 50/50 split: Control vs best candidate, or rotate thresholds week by week if your traffic is low
  • Keep EVERYTHING else the same (pricing, discounts, creative)
• At the end, plug real numbers into your table and see which line actually gave you the highest total profit. Not just the highest AOV.

5. Guardrails so you don’t blow yourself up:

• The extra revenue gained from people stretching to hit the threshold × gross margin% must be greater than the shipping you’re eating, with buffer.
• Low AOV + high shipping floor? Tie thresholds to multi-unit bundles, not single-item orders.
• High-margin, light items can support more aggressive thresholds; heavy, low-margin products cannot.

Takeaway:​
Don’t guess your free shipping threshold.

Do the math, run a real test, and let the numbers tell you where profit lives.

The “boring” spreadsheet and a 30-day test are what actually make you rich here.

​
Andrej

PS: Meme about low free-shipping thresholds.​