Offer free shipping above a threshold, charge a small flat rate below it, and bill the actual cost for anything heavy or bulky.
Unconditional free shipping only works if the margin on every order covers it, including the smallest one. The word "free" describes what the customer sees, never what the store pays.
The benchmark
For each cart tier, set the margin the order leaves before shipping next to what shipping costs, including prep and packaging. Here's a fictional example with a €6 shipment. Redo it with your own numbers:
| Cart total (excl. tax) | Margin before shipping | Shipping cost | Share of margin absorbed |
|---|---|---|---|
| €25 | €11 | €6 | 55% |
| €50 | €24 | €6 | 25% |
| €90 | €44 | €6 | 14% |
When shipping absorbs more than a third of a tier's margin, that tier can't take free shipping.
That third is a working benchmark, and it tightens as your acquisition cost climbs. In the example, free shipping would fit at around €50.
At a small-accessories brand the authors work with, the average cart is around €26 excl. tax, with free shipping starting at €39.
So most orders pay for their own shipping. On products at this price, that amount weighs enough to make the same items look more expensive than on marketplaces, where free shipping is easier to get.
About one cart in five contains two units of the flagship product.
It's not yet clear whether those customers really wanted two or whether the threshold nudged them into it. That's the whole point of the test being prepared with the brand's team, which will be judged on margin.
The rule
Shipping becomes free at the threshold where the margin absorbs the cost. Below it, a flat rate is announced right on the product page, and no amount appears for the first time at the last step: the Baymard Institute ranks extra costs that are too high at the top of the abandonment reasons a store can fix.
This flat rate has a bad reputation, seen as a penalty on small orders. Look instead at what happens when it disappears.
Unconditional free shipping is funded through your prices or your margin. That means mostly through large carts, which cover it easily, to the benefit of single-item orders, which never cover it.
The flat rate stops that transfer by asking the small order to pay part of what it costs, without driving shoppers away as long as it stays modest.
The steps
- The shipping cost. Pull it by delivery method (home, pickup point, express) from your carrier and logistics provider invoices.
- The margin by tier. Cross this cost with the pre-shipping margin of three or four cart tiers.
- The threshold and the flat rate. Set free shipping where shipping drops back under a third of the margin, then pick a rate that covers a good part of the cost without becoming a deterrent.
- The pickup point. Offer it by default if it costs less than home delivery.
- The display. Announce the rate and the threshold on the product page, then show in the cart how much more to add to get free shipping.
- The line for leadership:
"Under €___, every shipment costs us ___% of the order's margin. Above €___, we can offer it for free, and here's the flat rate that covers the gap below."
The pitfall
Many people confuse free shipping with free returns. They're two separate decisions, and the second costs far more, since it pays for shipping on a canceled sale, on top of the outbound shipping already paid.
Another pitfall awaits stores that also sell a few books in a catalog of other items.
In France, shipping for a new book sold at a distance can never be free: the 2023 order requires at least €3 including tax when the books in the order are worth less than €35, and an amount above zero beyond that. The calculation covers only the value of the books, so an €80 cart containing a €15 book is still subject to the €3 minimum.
This constraint surfaced while preparing the accessories brand's test, whose catalog includes one book: its free-shipping rule must exclude it, otherwise the promotion itself becomes illegal.
