Should you offer free shipping? A decision guide
You should offer free shipping only when your margins and average order value can absorb the cost, or when you can raise prices enough to cover it without killing conversion. Free shipping is a marketing tool, not a free gift: someone always pays for the parcel. This guide gives you a decision framework, the models to choose from, and the math to run before you flip it on.
Why free shipping works (and what it really is)
Shoppers strongly prefer "free shipping" over the same total cost split into product plus a shipping line at checkout. Unexpected shipping cost at checkout is one of the most common reasons carts get abandoned. So free shipping can lift conversion and average order value. But the carrier still charges you. "Free" shipping means you have chosen to pay for it, absorb it, or bake it into your prices. The decision is whether that trade improves your profit, not just your conversion rate.
The four ways to offer free shipping
| Model | How it works | Best when |
|---|---|---|
| Baked into price | Raise product prices to cover shipping, advertise "free shipping" | Margins allow a price bump buyers will accept |
| Free over a threshold | Free above a minimum order value | You want to lift average order value |
| Absorb the cost | Eat shipping to win the sale | High margin, high lifetime value, or a promo |
| Free on select items | Only light or high-margin SKUs ship free | Mixed catalog with varied margins and weights |
The decision framework
Work through these questions in order. If you answer "no" to the first few, free shipping across the board is probably not right for you yet.
- What does an average order cost to ship? Use your real billable weights and destinations, not a guess.
- What is your gross margin per order? If shipping eats most of it, blanket free shipping will hurt.
- Can you raise prices without losing sales? If yes, baked-in free shipping is often the cleanest option.
- What is your average order value? A threshold works only if it is set above your current average so it actually nudges bigger carts.
- How predictable are your shipping costs? Wildly variable costs (heavy items, wide zones, cross-border) make flat free shipping risky.
How to set a free-shipping threshold
A threshold ("free shipping over $X") is the most popular model for growing stores because it lifts average order value while protecting you on small orders. To set it well:
- Find your current average order value.
- Set the threshold modestly above it, so customers add one more item to qualify.
- Check that your margin on an order at the threshold still covers the shipping you are giving away.
- Show progress ("You are $8 away from free shipping") to nudge the add-on.
Set the threshold too high and it demotivates; too low and you give away shipping you would have gotten anyway.
Run the break-even math
Before committing, do this simple check for a typical order. Say a product sells for $40, costs you $22, and ships for $9. Your margin before shipping is $18. If you absorb the $9, you keep $9 in gross profit. Now compare that to charging shipping: you keep $18 in margin but may convert fewer buyers. The right choice is whichever produces more total profit across your order volume, which is why you test it rather than assume. If your margin before shipping were only $10, absorbing $9 would leave almost nothing, and free shipping would be a mistake unless you raise prices.
Rule of thumb: if shipping is a large share of your pre-shipping margin, do not offer blanket free shipping. Use a threshold, bake it into price, or limit it to high-margin items.
Lower the cost first, then decide
Free shipping is far easier to afford when your shipping costs are already lean. Before you commit, right-size packaging and compare carriers so the number you are absorbing is as small as possible. See how to reduce shipping costs, rate shopping, and discounted shipping rates. Dimensional weight matters here too, covered in dimensional weight and how to lower it.
Cross-border is a special case
If you ship internationally or into the U.S. from overseas, "free shipping" is much harder because duties, customs, and longer routes make costs higher and less predictable. Most cross-border sellers use thresholds or bake costs into price by market. See cross-border ecommerce shipping and shipping to the USA.
Where Expership fits
Because free shipping only works when your underlying costs are controlled, multi-carrier software helps you afford it. Expership lets ecommerce sellers compare carriers, buy labels, and automate fulfillment so the shipping cost you are absorbing is the lowest available. See the platform or create an account.
Frequently asked questions
Does free shipping actually increase sales?
It often lifts conversion and average order value because shoppers dislike seeing a shipping charge at checkout. Whether it increases profit depends on your margins, so measure the net effect rather than assuming.
What is a good free-shipping threshold?
Set it modestly above your current average order value so it encourages customers to add one more item, while still leaving enough margin at that order size to cover the shipping you give away.
Is it better to bake shipping into the price or charge it separately?
Baking it in and advertising free shipping usually converts better, but only if your prices can rise without losing sales. If your category is highly price-sensitive, a threshold may be safer.
Should I offer free shipping if my margins are thin?
Not across the board. With thin margins, use a threshold, limit free shipping to high-margin items, or lower your shipping costs first so the amount you absorb is smaller.
Can I offer free returns too?
Free returns lift buyer confidence but add cost. Treat it as a separate decision and weigh it against your return rate and margins. See our returns guide for the trade-offs.