Educational only: Business decision support, not accounting, tax or legal advice.
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Update policy: Reviewed when formulas or official dependencies change.
Scope: Market-neutral small-business planning using your own assumptions.
What this planner helps you decide
Best for
Ecommerce sellers deciding whether a free-shipping offer can preserve contribution.
Outputs
Profit-preserving basket threshold, contribution impact and the minimum order lift required.
Start here
Use your current basket, shipping charge and contribution margin, then test a conservative order lift.
Use a different tool when: Do not use this to test order contribution after the full fee stack; use Ecommerce Order Profitability Planner for that decision. Use this tool to set a free-shipping threshold without erasing contribution.
Commerce & operations
Free Shipping Threshold: profit-preserving basket threshold
Profit-preserving basket threshold, contribution impact and the minimum order lift required.
Amounts use the same currency as your inputs. No currency conversion is performed.
Free-shipping offer assumptions
Compare a paid-shipping baseline with your own basket and order scenarios.
Your numbers stay in this browser
Average product revenue per current order.
Shipping revenue forgone when a qualifying order becomes free shipping.
Your carrier and fulfilment shipping cost per order.
Share of product revenue retained after variable costs already modelled elsewhere.
Average product revenue for a free-shipping order in this scenario.
Order mix, lift scenario and indirect tax displayOpen the assumptions you are less likely to change on every comparison.
Use one consistent period for orders and the result.
Scenario share of post-offer orders receiving free shipping.
Your scenario assumption, not a Margin101 conversion forecast.
Threshold scenario
Based only on your basket, margin and order assumptions.
PDF and CSV exports stay on this device. Clean page links contain no inputs.
The entered basket is marked so you can see whether nearby basket values improve or reduce period contribution.
Period contribution change
- No contribution change
- 0.00
| Qualifying basket (currency units ex indirect tax) | Period contribution change |
|---|---|
| 120.00 | 1,370.00 |
| 130.00 (current) | 2,630.00 |
| 140.00 | 3,890.00 |
Scenario comparison
Each row names the assumption axis changed from the baseline.
ScenarioResultDifference
Entered offer2,630.00Baseline
Basket 10 lower1,370.00-1,260.00
Basket 10 higher3,890.001,260.00
No order lift600.00-2,030.00
Save these results, change an input, then compare the updated figures with this baseline.
The baseline is temporary in this tab and is not added to shared scenario links or generated reports.
Calculation details
View calculation detailsView the formulas and inputs used for these results.
Profit-preserving threshold including indirect tax
Profit-preserving threshold
average basket + (shipping charge ÷ pre-shipping contribution margin)125/order ex indirect taxCustomer-facing indirect tax display
profit-preserving threshold ex indirect tax × (1 + policy indirect tax rate)125/order inc indirect taxResult125.00
Customer-facing threshold including the registered market-neutral indirect tax scenario.
Review the threshold and indirect tax display formulas →Inputs used by these formula steps
- Profit-preserving thresholdBasket
- 100
- Profit-preserving thresholdShipping Charge
- 10
- Profit-preserving thresholdMargin
- 0.4
- Customer-facing indirect tax displayThreshold Ex indirect tax
- 125
- Customer-facing indirect tax displayindirect tax Rate
- 0
Profit-preserving threshold excluding indirect tax
Baseline contribution per order
margin × average basket + shipping charge − outbound shipping cost40/order ex indirect taxCustomer shipping charge received
entered customer shipping charge10/order ex indirect taxOutbound shipping cost and cancellation
the same outbound cost is subtracted in both compared orders10/order ex indirect tax in each scenarioProfit-preserving threshold
average basket + (shipping charge ÷ pre-shipping contribution margin)125/order ex indirect taxResult125.00
Basket revenue required to replace the current customer shipping charge while preserving contribution.
Review the profit-preserving threshold formula →Inputs used by these formula steps
- Baseline contribution per orderBasket
- 100
- Baseline contribution per orderMargin
- 0.4
- Baseline contribution per orderShipping Charge
- 10
- Baseline contribution per orderShipping Cost
- 10
- Customer shipping charge receivedShipping Charge
- 10
- Outbound shipping cost and cancellationShipping Cost
- 10
- Profit-preserving thresholdBasket
- 100
- Profit-preserving thresholdShipping Charge
- 10
- Profit-preserving thresholdMargin
- 0.4
Incremental contribution per period
Qualifying-order contribution
margin × qualifying basket − outbound shipping cost42/order ex indirect taxPost-offer average contribution
(1 − qualifying share) × baseline + qualifying share × qualifying contribution40.60/order ex indirect taxPost-offer orders
baseline orders × (1 + entered order change)1,050 orders/periodIncremental contribution
post-offer orders × average contribution − baseline orders × baseline contribution2,630/period ex indirect taxResult2,630.00
Post-offer contribution less baseline contribution for the selected planning period, excluding indirect tax.
Review the incremental contribution formula →Inputs used by these formula steps
- Qualifying-order contributionMargin
- 0.4
- Qualifying-order contributionQualifying Basket
- 130
- Qualifying-order contributionShipping Cost
- 10
- Post-offer average contributionQualifying Share
- 0.3
- Post-offer average contributionBaseline
- 40
- Post-offer average contributionQualifying
- 42
- Post-offer ordersBaseline Orders
- 1,000
- Post-offer ordersOrder Lift
- 0.05
- Incremental contributionPost Offer Orders
- 1,050
- Incremental contributionPost Offer Contribution
- 40.6
- Incremental contributionBaseline Orders
- 1,000
- Incremental contributionBaseline Contribution
- 40
Minimum required order lift
Post-offer average contribution
(1 − qualifying share) × baseline + qualifying share × qualifying contribution40.60/order ex indirect taxMinimum required order lift
max(0, baseline period contribution ÷ (baseline orders × post-offer average contribution) − 1)0Result0.00%
Order increase required for post-offer period contribution to cover the baseline period contribution. Displayed to two decimal percentage points; the engine retains full precision.
Review the break-even order-lift formula →Inputs used by these formula steps
- Post-offer average contributionQualifying Share
- 0.3
- Post-offer average contributionBaseline
- 40
- Post-offer average contributionQualifying
- 42
- Minimum required order liftBaseline Contribution
- 40,000
- Minimum required order liftBaseline Orders
- 1,000
- Minimum required order liftPost Offer Average Contribution
- 40.6
Inputs used
- Current average basket, excluding indirect tax
- 100.00
- Current customer shipping charge, excluding indirect tax
- 10.00
- Outbound shipping cost, excluding indirect tax
- 10.00
- Pre-shipping contribution margin
- 40%
- Current orders per planning period
- 1,000
- Qualifying order share
- 30%
- Order change scenario
- 5%
- Qualifying basket, excluding indirect tax
- 130.00
- Indirect tax rate
- 0%
Open this calculator with preset values
This calculator supports documented, shareable scenario URLs. Compatible assistants and applications can construct links using the parameters below.
Scenario links contain only allowlisted numeric and closed-choice inputs shown in the URL; Margin101 excludes free text and identifying fields. Anyone you share the URL with can read those numbers, so do not include private or identifying data.
| Parameter | Meaning | Unit | Allowed values | Presence | Default |
|---|---|---|---|---|---|
| currentAverageBasketRevenueExGst | Average product revenue per current order. | currency units/order, ex indirect tax | 0 to 10000000 | Required | 100 |
| currentCustomerShippingChargeExGst | Shipping revenue forgone when a qualifying order becomes free shipping. | currency units/order, ex indirect tax | 0 to 10000000 | Required | 10 |
| expectedOrderLift | Your scenario assumption, not a Margin101 conversion forecast. | proportional change in orders versus baseline | -0.99 to 10 | Required | 0.05 |
| expectedQualifyingBasketRevenueExGst | Average product revenue for a free-shipping order in this scenario. | currency units/qualifying order, ex indirect tax | 0 to 10000000 | Required | 130 |
| ordersPerPeriod | Use one consistent period for orders and the result. | orders/planning period | 0.01 to 10000000 | Required | 1000 |
| outboundShippingCostExGst | Your carrier and fulfilment shipping cost per order. | currency units/order, ex indirect tax | 0 to 10000000 | Required | 10 |
| preShippingContributionMargin | Share of product revenue retained after variable costs already modelled elsewhere. | proportion of product revenue retained before shipping | 0.01 to 1 | Required | 0.4 |
| qualifyingOrderShare | Scenario share of post-offer orders receiving free shipping. | proportion of post-offer orders receiving free shipping | 0 to 1 | Required | 0.3 |
Free Shipping Threshold: profit-preserving basket threshold
Use the threshold as the basket value needed to fund the shipping offer under the entered contribution assumptions.
Formula summary
- Primary formula
- preserved threshold = current average basket + (current shipping charge ÷ pre-shipping contribution margin)
Data used here
- The estimate uses your inputs and the general business formula documented in the methodology.
Decision checks
Act on the result
Set a customer-facing threshold that is operationally simple and compare it with the current average order value.
Stress-test the decision
Test a smaller basket lift, higher shipping cost or lower contribution margin before launching the offer.
When this estimate can be misleading
- Order lift, qualifying share and basket size are your scenarios, not forecasts.
- The model holds outbound shipping cost and pre-shipping contribution margin constant per order.
- It excludes carrier zones, split shipments, returns, demand elasticity and accounting advice.
- Use the threshold as the basket value needed to fund the shipping offer under the entered contribution assumptions.
Educational estimate, not advice. See all assumptions & limitations →
Related reading
Guides to interpret the decision and its assumptions.
- How to Test a Free-Shipping Threshold
Test basket size, qualifying share, shipping cost and order-change assumptions around a contribution-preserving threshold.
Read guide
Frequently asked questions
How do I set a free-shipping threshold without erasing contribution?
Set a customer-facing threshold that is operationally simple and compare it with the current average order value.
Why can shipping cost cancel from the threshold formula?
The same outbound cost exists in both compared orders. The amount to replace is the customer shipping charge forgone by the offer.
Does this predict a conversion lift?
No. Order change and qualifying share are explicit scenarios you enter.
Are carrier rates built in?
No. Enter your own shipping economics; Margin101 uses no provider preset here.
Which planning assumptions should I stress-test?
Compare a plausible alternative scenario and verify the decision-critical assumption that changes the plan most.