What a free shipping threshold does
A free shipping threshold is a minimum spend that unlocks free delivery, and its job is to pull orders up to that number. A customer with $58 in the cart and free shipping at $75 has a choice: pay for postage, or spend $17 more on something they actually want. Many will pick the second.
The threshold only changes behaviour for orders sitting a little below it. Orders far below rarely stretch that far, and orders already above it get free shipping they'd have paid for anyway. The right number is the one that moves the most orders up for the least shipping given away.
It's one of several levers in our guide to increasing average order value on Shopify. Here we go deep on that one number.
How to calculate a starting threshold
Calculate your starting threshold from four numbers: AOV, median order value, typical product prices and contribution margin. Here's the process.
- Export 90 days of orders. Exclude test, wholesale and one-off bulk orders, and measure subtotal the same way the threshold will (before or after discounts).
- Work out AOV and median. AOV is total revenue ÷ orders. The median is the middle order when you sort them all from smallest to largest.
- Bucket your orders. Group them into $10 bands and count how many fall in each. You're looking for the cluster where most orders land.
- List your typical add-on prices. Note what customers usually add as a second item, not your most expensive product.
- Find your real shipping cost. Average what you pay to send an order across all destinations, including packaging, and compare it to what customers currently pay you for shipping.
- Pick a candidate and run the margin check. Set the threshold at median plus one typical add-on, then check the maths below.
Worked example (hypothetical). A store has an AOV of $68 and a median order of $54. Its hero product is $32 and the usual add-ons cost $15–$22. Customers currently pay a flat $9.95 for standard shipping, and the store's blended cost to send an order is $12.
Candidate threshold: median $54 + a $22 add-on = $76, rounded to $75. A customer at the median is $21 away, which one add-on covers.
Margin check on a pulled-up order: the customer adds $22 of product. At a 60% gross margin that's $13.20 of extra gross profit. The store loses the $9.95 shipping fee it would have collected, leaving about $3.25 more per order before payment fees. Positive, but thin.
The hidden cost: every order that was already above $75 and used to pay $9.95 now pays nothing. That's pure margin given away. If those orders far outnumber the ones the threshold pulls up, the threshold loses money even though AOV rises.
If the margin check is negative, raise the threshold or steer customers towards higher-margin add-ons.
In Shopify, you can set this up as a free shipping rate with a minimum order price in your shipping settings, or as an automatic free shipping discount with a minimum purchase amount. Either way, make sure the threshold matches what your cart message says.
Why median and order distribution matter
The median tells you what a typical customer spends, while AOV can be dragged up by a few big orders. In the example above, AOV is $68 but half of all orders are $54 or less.
The distribution matters even more. If most orders cluster between $40 and $60, a $75 threshold sits right above the crowd. If your orders split into two groups, say single items around $35 and gift bundles around $110, a single threshold can only target one group. Put it at $50 and the bundle buyers get free postage they'd have paid for. Put it at $120 and the single-item buyers ignore it.
Set the threshold just past where the cluster ends. That's where the most customers are close enough to be pulled.
The gap rule
The gap rule is simple: the distance between a typical cart and your threshold should be covered by one more typical item. If the gap is $21 and your common add-ons cost $15–$22, the customer can close it with a single, natural decision.
If the gap needs two or three more items, most customers won't bother. If the gap is $4, you're mostly paying postage. And if nothing sensible sits in the gap price range, create a small add-on (a refill, an accessory, a sample pack) or adjust the threshold.
This is where bundles and upsells earn their place. A well-priced add-on is the bridge between cart and threshold.
Show progress in the cart and on the page
A threshold only works if customers know how close they are. Show a free shipping bar in the cart with the exact gap: "You're $12 away from free shipping". When the threshold is met, change the message to confirm it: "You've unlocked free shipping".
- In the cart and cart drawer. Put the progress bar at the top, with one suggested product underneath that closes the gap.
- On product pages. A short line near the price, such as "Free shipping on orders over $75", sets the expectation before the cart.
- In the announcement bar. Short, and consistent with the cart.
Calculate the gap on the same basis as the real rule. If a discount code drops the subtotal back under the threshold at checkout, customers feel tricked.
Add a second tier
Once a free shipping threshold is working, a second tier can pull larger orders higher still. The usual pattern is free shipping first, then a free gift at a higher spend, for example free shipping at $75 and a free travel-size product at $110.
Show both tiers on one progress bar, and keep it to two. More turns a simple nudge into a puzzle, and each tier needs its own margin check.
Australian shipping costs to plan for
Shipping cost in Australian ecommerce varies a lot by destination, so your threshold has to work on the average, not the cheapest metro order. Distances are long, and sending to regional and remote areas usually costs more than sending within a capital city.
- Zones. Work out your blended shipping cost from your actual mix of destinations, then look at the most expensive zones separately. If those orders lose money with free shipping, you can exclude them or set a higher threshold for them.
- Bulky or heavy items. Products charged by size or weight can make free shipping unprofitable on certain orders. Consider excluding them or giving them their own rate.
- Express vs standard. Make the free option standard shipping and keep express as a paid upgrade. Say so clearly in the cart.
Recheck your costs whenever carrier rates change.
Threshold options compared
Most stores choose between these options.
| Option | Pros | Cons |
|---|---|---|
| No free shipping | Keeps all shipping revenue | No reason to add more; shipping cost can stall checkout |
| Free shipping on everything | Simple, removes a reason to hesitate | Absorbs postage on every order; no pull on order size |
| Threshold below median | Easy to reach, feels generous | Most orders qualify anyway, so you give away margin |
| Threshold just above median (one item away) | Pulls the largest group of orders up | Needs a sensible add-on in the gap price range |
| Threshold well above AOV | Gives away little shipping | Feels out of reach; few customers try |
| Threshold plus gift tier | Keeps pulling after free shipping is unlocked | Gift cost and extra complexity to manage |
How to test your threshold
Test a new threshold with an A/B test, and judge it by revenue per visitor and margin per order, not conversion rate alone. A lower threshold can lift conversion while losing money; a higher one can lift AOV while losing buyers.
- Record your baseline. Conversion rate, AOV, median order, revenue per visitor and average margin per order after shipping.
- Test one variable. Compare your current threshold against one alternative, with the same cart message design in both.
- Run it for at least two full weeks, longer if you get few orders. Our Shopify A/B testing guide covers setup and sample size.
- Read the results in order. Revenue per visitor first, then margin per order. If revenue per visitor rose but margin per order fell, the threshold is too generous.
To see how much shipping friction and small orders might be costing you, try our revenue leak calculator.
Mistakes to avoid
Most threshold mistakes come from picking a number that sounds right instead of one that fits your orders.
Setting it too high
A threshold two or three items away feels out of reach, so customers ignore it or leave at the shipping step.
Setting it too low
A threshold at or below your median gives free postage to orders you'd have won anyway. AOV barely moves and margin falls.
Hiding it
If customers only discover the threshold at checkout, it can't change what they put in the cart. Show it on the product page, in the cart and in the announcement bar.
Changing it during a sale
Discounts lower cart values, so a threshold that worked at full price can feel further away mid-sale. Don't change it on the fly or test a new one mid-promotion; plan sale thresholds in advance.
This is part of how Tap Vortex builds sale pages: a clear tier ladder with a free shipping tier, one-tap adds that close the gap and savings shown as numbers, A/B tested against your current page. Read more about our Shopify CRO agency work or start on the Tap Vortex home page.
FAQ
What is a good free shipping threshold for a Shopify store?
There is no single good number, because it depends on your order values, product prices and shipping costs. A sensible starting point is just above your median order value, at a level most customers can reach by adding one more typical item. Then check that the extra margin on those orders covers the shipping you give away, and test it.
Should I base my free shipping minimum on AOV or median order value?
Look at both, but lean on the median. AOV can be pulled up by a few large orders, which makes it look like customers spend more than most actually do. The median and the spread of your orders show where the typical cart sits, which is the group a threshold needs to reach.
Does a free shipping bar help on Shopify?
A free shipping bar helps because it shows customers exactly how far they are from the threshold, which makes adding one more item an easy decision. It works best in the cart with the exact dollar gap and a suggested product that closes it. Without a visible bar, many customers never realise how close they are.
Can I offer free shipping only on standard delivery in Australia?
Yes. Many stores offer free standard shipping above the threshold and keep express as a paid upgrade. You can also exclude bulky items or set different rules for remote areas if those orders cost much more to send. Just make the rules clear in the cart so there are no surprises at checkout.
How long should I test a new free shipping threshold?
Run the test for at least two full weeks so weekday and weekend shopping are both included, and longer if your store gets few orders. Avoid testing during a sale. Judge the result by revenue per visitor and margin per order, not conversion rate alone.