This calculator estimates the minimum order value at which a store can absorb shipping cost while still reaching a chosen target profit margin.
How it works
Product cost is modeled as a percentage of order value so costs scale with a larger basket. Platform and payment fees also scale with sales, while fixed, packaging and shipping costs remain fixed per order.
The formula
The model assumes the entered product-cost percentage remains representative as basket value changes. If larger baskets have different product mixes, update the percentage accordingly.
Worked example
With an average order of 150, product cost 45%, platform fee 2%, payment fee 2.5%, fixed fee 1, packaging 4, shipping 20 and a 30% target margin, the minimum free-shipping threshold is about 121.95.
This is a planning model, not a marketplace or carrier quote. Taxes, returns, split shipments, weight-based charges, remote-area fees and discounts can change actual economics.
Frequently asked questions
Why use product cost as a percentage?
A threshold changes the basket value, so using a percentage allows product cost to scale with the order instead of remaining unrealistically fixed.
What if my current average order is already above the threshold?
The threshold gap becomes zero, indicating that the current average order already supports the target margin under the entered assumptions.