How to Set a Free Shipping Threshold for Your Small Store
Short answer: Set the threshold from your own numbers, not a competitor's. Start a little above your typical order value, then check that an order topped up to the threshold still earns at least as much as a normal order after you pay for the label. Configure it as a price-based rate in Shopify or a minimum-order rule in WooCommerce, show shoppers how close they are, and run it long enough to compare before and after.
Why "just pick $50" goes wrong
Free shipping above a minimum does two things at once. It nudges some shoppers to add another item, which is the point. It also gives away the shipping fee on every order that was already above the line, which is a pure cost. Whether the threshold pays off depends on the balance of those two groups, and that balance is different for every store. A threshold copied from a bigger retailer with cheaper shipping contracts can quietly turn your best orders into your least profitable ones.
A worked calculation (hypothetical numbers)
The figures below are invented to show the method. Replace every one with your own from your order export and shipping invoices.
A hypothetical store selling candles and home goods:
- Average order value: $46
- Gross margin on products: 50%
- Current flat shipping charge: $7.95
- Average label cost actually paid: $9.20 (about $9.60 for a slightly bigger parcel)
The useful measure is contribution per order: product margin plus shipping charged, minus the label.
| Scenario | Product margin | Shipping charged | Label cost | Contribution |
|---|---|---|---|---|
| Today: a $46 order | $23.00 | $7.95 | $9.20 | $21.75 |
| Threshold $60: shopper tops up from $46 to $60 | $30.00 | $0 | $9.60 | $20.40 |
| Threshold $70: shopper tops up from $46 to $70 | $35.00 | $0 | $9.60 | $25.40 |
| Either threshold: an $80 order that would have happened anyway | $40.00 | $0 | $9.60 | $30.40 (was $38.35) |
What this tells our hypothetical store:
- At $60, a shopper who tops up is slightly less profitable than before. The threshold only pays if it also wins orders that would otherwise have been abandoned.
- At $70, a top-up is clearly better, but fewer people will stretch that far from $46.
- Every large order loses $7.95 either way. If a quarter of your orders are already above the line, that's a real cost to recover.
The rule of thumb that falls out: the extra margin from the top-up has to cover the shipping fee you stop charging. Divide the fee by your margin to find the minimum top-up that breaks even. Here, $7.95 ÷ 0.50 ≈ $16, so a threshold around $62 or higher is where the top-up starts to pay for itself.
Look at the distribution, not just the average
Export your orders from the last six to twelve months and bucket them by value. If most orders cluster at $40–50, a threshold at $60–65 is a reachable stretch. If your orders are spread from $15 to $200, an average hides too much and you may be better off with tiered rates (cheaper shipping above one amount, free above another).
Also check that you have a sensible add-on product. A threshold works best when there's something worth $10–20 that people genuinely want, such as refills, a smaller size or an accessory.
Setting it up
Shopify
Shopify gives you two routes, according to its help pages as of November 2026.
Price-based shipping rates. In Settings > Shipping and delivery, open your shipping profile and add a rate with the rate type Order amount. Create tiers with a minimum and maximum order value; leaving the price empty or at 0 makes that tier free. Shopify warns that your tiers must cover the full range of order values, because an order that falls outside every tier gets no rate at all. Leave the top tier's maximum empty.
You can also select Offer free shipping on an existing rate and enter the minimum amount to qualify.
A free shipping discount. Under Discounts, create an automatic free shipping discount with a minimum purchase amount. Two details from Shopify's documentation matter here: the minimum counts product prices after other combinable discounts, and gift cards in the cart count toward it. If you sell gift cards, decide whether that's acceptable. This route also lets you exclude shipping rates above a set amount, which stops free shipping from applying to express options.
Shopify notes that shipping profiles are gradually moving to "shipping options by market"; if your admin looks different, that migration is the likely reason.
WooCommerce
In WooCommerce > Settings > Shipping, open the zone, add the Free shipping method and set Free shipping requires to "A minimum order amount" (or one of the coupon combinations). WooCommerce's documentation describes a checkbox, Apply minimum order rule before coupon discount. Unchecked, the minimum is measured after coupons; checked, before. Most stores want it unchecked so a coupon can't drag an order under the line and still ship free.
Remember to keep your paid rate available for orders below the minimum, and test what happens when both methods show at checkout.
Show the progress
Tell shoppers how close they are: "You're $14 away from free shipping" in the cart drawer and on the cart page. Many themes include this, and apps add it if yours doesn't. Mention the threshold once near the top of the site as well. A threshold that shoppers only discover at checkout can't change what they put in the cart.
The test plan
- Record a baseline for four to six weeks: conversion rate, average order value, share of orders above the planned threshold, and contribution per order using your real label costs.
- Switch the threshold on and leave it alone for the same length of time. Avoid starting a test right before a holiday peak, which distorts everything.
- Compare contribution per order and total contribution, not just average order value. A higher AOV with lower contribution is a loss.
- Check where orders land. A pile-up just above the threshold means it's working as a nudge. No change in the distribution means shoppers don't notice it or don't care.
- Adjust in one direction and repeat. Small stores rarely have the traffic for a clean split test on shipping, so a careful before-and-after is the realistic option.
FAQ
Should the threshold be above or below my average order value?
Usually a little above it, so a typical shopper has a reason to add one item. Set it far above and almost nobody reaches it; set it below and you mainly give away shipping on orders you'd have had anyway.
Can I offer free shipping only to some states or zones?
Yes. Shopify's free shipping discount can be limited to selected countries, and both Shopify rates and WooCommerce methods are set per shipping zone, so remote or expensive zones can keep a paid rate.
What if my products are heavy or bulky?
Then a single threshold may never work. Consider free shipping on lighter product lines only, or tiered rates that reduce rather than remove the charge.
Is it better to raise prices and offer free shipping on everything?
Sometimes. Run the same contribution calculation with the higher prices and compare. It suits stores with a narrow range of order values and similar parcel sizes.
If you'd like your shipping rules and cart messaging rebuilt around your actual order data, send us a rough export and we'll take a look.