Calculate the impact of offering free shipping on orders over a specific amount on your profit margins.
Set an amount orders must exceed to get free shipping.
Estimate how many orders will meet the new threshold.
Results Summary
Current Average Profit per Order: $0.00
Cost of Free Shipping Program
Average Shipping Subsidy per Order (Absorbed Cost): $0.00
New Average Profit per Order (After Subsidy): $0.00
New Net Profit Margin: 0.00%
Margin Reduction Impact: 0.00% points
To maintain your original profit margin without raising prices, your Average Order Value needs to increase to roughly: $0.00
function calculateShippingImpact() {
var avgOrderValueStr = document.getElementById("avgOrderValue").value;
var profitMarginStr = document.getElementById("profitMargin").value;
var shippingCostStr = document.getElementById("shippingCost").value;
var proposedThresholdStr = document.getElementById("proposedThreshold").value;
var eligiblePercentStr = document.getElementById("eligiblePercent").value;
var avgOrderValue = parseFloat(avgOrderValueStr);
var profitMargin = parseFloat(profitMarginStr);
var shippingCost = parseFloat(shippingCostStr);
// Threshold input is used for context/planning by user, but not strictly needed in this specific margin impact calculation loop, though critical for the merchant's strategy.
var eligiblePercent = parseFloat(eligiblePercentStr);
var resultDiv = document.getElementById("fsResult");
if (isNaN(avgOrderValue) || isNaN(profitMargin) || isNaN(shippingCost) || isNaN(eligiblePercent) || avgOrderValue < 0 || profitMargin < 0 || shippingCost < 0 || eligiblePercent 0) {
newMarginDecimal = newProfitPerOrder / avgOrderValue;
}
var newMarginPercent = newMarginDecimal * 100;
var marginImpact = profitMargin – newMarginPercent;
// 4. Calculate Break-Even AOV needed
// To keep the same total profit dollars while absorbing shipping, AOV must rise.
// New Profit needed = Current Profit + Subsidy Cost
// New AOV * Margin = (Old AOV * Margin) + Subsidy
var breakEvenAOV = 0;
if (marginDecimal > 0) {
breakEvenAOV = (currentProfitPerOrder + avgSubsidyPerOrder) / marginDecimal;
}
// Output Results
document.getElementById("currentProfitResult").innerText = "$" + currentProfitPerOrder.toFixed(2);
document.getElementById("subsidyCostResult").innerText = "$" + avgSubsidyPerOrder.toFixed(2);
document.getElementById("newProfitResult").innerText = "$" + newProfitPerOrder.toFixed(2);
document.getElementById("newMarginResult").innerText = newMarginPercent.toFixed(2) + "%";
document.getElementById("marginImpactResult").innerText = "-" + marginImpact.toFixed(2) + "%";
if (breakEvenAOV > 0 && isFinite(breakEvenAOV)) {
document.getElementById("breakEvenAOV").innerText = "$" + breakEvenAOV.toFixed(2);
} else {
document.getElementById("breakEvenAOV").innerText = "N/A (check margin inputs)";
}
resultDiv.style.display = "block";
}
.fs-calculator-container {
max-width: 600px;
margin: 20px auto;
padding: 20px;
border: 1px solid #e0e0e0;
border-radius: 8px;
background-color: #f9f9f9;
font-family: sans-serif;
}
.fs-calculator-container h2 {
text-align: center;
color: #333;
}
.fs-calc-box {
background: #fff;
padding: 20px;
border-radius: 8px;
box-shadow: 0 2px 5px rgba(0,0,0,0.05);
}
.fs-input-group {
margin-bottom: 15px;
}
.fs-input-group label {
display: block;
margin-bottom: 5px;
font-weight: 600;
color: #555;
}
.fs-input-group input {
width: 100%;
padding: 10px;
border: 1px solid #ccc;
border-radius: 4px;
box-sizing: border-box; /* Important for padding not affecting width */
}
.fs-calc-btn {
width: 100%;
padding: 12px;
background-color: #28a745;
color: white;
border: none;
border-radius: 4px;
font-size: 16px;
cursor: pointer;
transition: background-color 0.3s;
}
.fs-calc-btn:hover {
background-color: #218838;
}
.fs-result-box {
margin-top: 25px;
padding: 20px;
background-color: #fff;
border: 1px solid #ddd;
border-radius: 4px;
}
.fs-result-box h3 {
margin-top: 0;
color: #333;
border-bottom: 2px solid #28a745;
padding-bottom: 10px;
}
Understanding the Free Shipping Threshold Calculator
Offering free shipping is one of the most powerful marketing tools for an e-commerce business. It reduces cart abandonment and can significantly increase conversion rates. However, "free" shipping is never truly free; the merchant must absorb the cost. Setting the right free shipping threshold is a delicate balance between enticing customers to buy more and maintaining profitability.
How This Calculator Works
This tool helps store owners analyze the financial impact of introducing a free shipping threshold. It calculates how much profit margin you sacrifice by absorbing shipping costs on qualifying orders. Here is a breakdown of the inputs:
Current Average Order Value (AOV): The average amount a customer currently spends per transaction on your site before any changes.
Current Average Gross Profit Margin: Your gross profit percentage. For example, if you sell a product for $100 that costs you $60 to acquire, your gross margin is 40%.
Average Shipping Cost to Merchant: What you actually pay your carrier (USPS, UPS, FedEx, etc.) to ship an average-sized order.
Proposed Free Shipping Threshold: The cart total a customer must reach to qualify for free shipping (e.g., "Free Shipping on Orders Over $75!").
Estimated % of Orders That Will Qualify: The percentage of your total orders you anticipate will meet or exceed this new threshold.
Interpreting Your Results
The calculator provides critical metrics regarding the cost of the program. The key metric is the Average Shipping Subsidy per Order. This figure spreads the cost of free shipping across all your orders based on the percentage that qualify. It shows you exactly how much profit you are losing, on average, per transaction to fund the program.
For example, if your current AOV is $50 with a 40% margin ($20 profit), and shipping costs you $8. If you estimate 25% of orders will hit your new threshold, you are essentially subsidizing every order by an average of $2.00 ($8.00 cost * 25%). Your new average profit drops to $18.00, reducing your margin.
Finding the "Break-Even" Point
The goal of a free shipping threshold is usually to nudge customers to add just one more item to their cart to reach the "free" tier. The calculator shows a Break-Even AOV. This is the target Average Order Value you need to achieve so that the extra profit from larger carts completely offsets the new shipping costs, keeping your total profit dollars the same.