How to Calculate a Free Shipping Threshold

Free shipping for the customer is still a cost for the seller. A higher basket value is useful only if the order leaves enough contribution to pay for shipping and the other costs you have chosen to include. Start with that contribution rather than copying another shop's threshold.

Define contribution before shipping

Subtract product cost, variable commissions and relevant packing expenses from sales on a consistent tax basis. If you include advertising or expected returns at this stage, label those items. The remaining amount is the contribution available before the shipping cost in this model.

The video assumes a 25% pre-shipping contribution rate and TRY 75 seller-funded shipping. A TRY 200 basket leaves TRY 50 before shipping and minus TRY 25 afterwards. A TRY 400 basket leaves TRY 100 before shipping and TRY 25 afterwards. At TRY 600, the remaining contribution is TRY 75.

These are illustrative calculations. The remaining amount is not automatically net business profit: fixed expenses and any excluded costs still need funding.

Calculate the basic threshold

To cover shipping alone, divide shipping cost by the contribution rate. Here, 75 ÷ 0.25 = TRY 300. At that basket value, the model leaves zero contribution after shipping. Reaching the threshold therefore does not mean reaching your desired profit.

If the target is TRY 50 remaining contribution per order, the formula becomes (75 + 50) ÷ 0.25 = TRY 500. Keep the percentage as a decimal in the calculation. The formula assumes that the contribution rate and shipping cost remain constant as the basket grows.

Test where those assumptions break

A heavier or lower-margin basket can have the same selling price but a different result. Additional items may create a second parcel or a higher dimensional-weight band. Recalculate when shipping or the product mix changes instead of extending the simple line indefinitely.

Build at least three representative baskets: a common mix, a heavy low-contribution mix and a higher-contribution mix. Name the products and actual shipping rule in each case. The parcel volume guide explains why package size belongs in this exercise.

Make return costs visible

Check which commissions are refunded and which shipping charges remain after a return. Use the platform statement and agreement rather than an assumed universal rule. Keep a completed-order scenario separate from a return scenario.

If you use an estimated return rate, mark it as an assumption. Do not present it as measured campaign performance. Once orders mature, compare actual outcomes with the estimate and update the model.

Evaluate the campaign after launch

Track order count, basket value and revenue alongside contribution per order. A sales increase can coexist with lower total contribution. Compare periods with care when advertising spend, product mix or pricing changed at the same time.

For a hypothetical check, 100 orders leaving TRY 40 each produce TRY 4,000 contribution. If a promotion produces 140 orders leaving TRY 25 each, the total is TRY 3,500. More orders did not offset the lower contribution. This arithmetic is a scenario, not a forecast of customer behaviour.

Keep the policy and the calculation aligned

Before publishing an offer, confirm which regions, products and conditions it covers. Ensure that the checkout rule matches the customer-facing wording. A profitable spreadsheet cannot fix a threshold that is applied differently in the actual order flow.

Keep input prices and the date of the calculation so you can repeat it after carrier or product-cost changes. The useful outcome is an updateable method, not one permanent threshold. For the underlying percentage distinction, read margin versus markup.

Related videos

The linked videos use Turkish narration. This article provides the English explanation of the same topic and assumptions.

• Watch the companion video
• Watch companion video 2

Edited by GKN Labs. Editorial update: 4 November 2026. Cover and explanatory visuals are illustrative, not evidence of product testing or measurement.