Free Shipping Profitability Calculator
"Free shipping" isn't free — you absorb the cost. See exactly what it costs per order and how much extra volume it needs to drive to break even.
Cost of free shipping per order
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Profit without free shipping
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Profit with free shipping
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Volume uplift to break even
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This models flat-rate free shipping absorbed on every order. If you offer free shipping only above an order-value threshold, model the average order value of orders that actually qualify, not your overall average.
How it works
Formulas used
Profit without free shipping = AOV − Order cost − Fees Profit with free shipping = AOV − Order cost − Fees − Shipping cost Volume uplift needed = Profit without / Profit with − 1
Worked example
$60 average order value, $20 average product cost, $7 shipping cost, no fees:
- Profit without free shipping: $60 − $20 = $40
- Profit with free shipping: $60 − $20 − $7 = $33
- Cost of the offer: $7/order, requiring roughly a +21.2% order-volume increase to break even
Limitations
This does not model the conversion-rate lift free shipping is well documented to drive — it tells you the break-even bar, not whether you'll clear it. Compare against your own A/B test data or industry benchmarks where available.
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Frequently asked questions
Should I raise prices slightly to fund free shipping?
Many sellers build shipping cost into product price and advertise "free shipping" rather than absorbing it as pure margin loss — this calculator shows you exactly how much margin cushion you would need to build in.