- The most successful brands set their free shipping threshold at 70-90% of their average order value (AOV).
- Premium brands set their FST lower, at around 30-50% of AOV, while add-on friendly categories can go as high as 90% of AOV.
- Stores that optimize their free shipping threshold can see their average revenue per customer (ARPC) go up by 5-15%.
The free shipping threshold can be a tricky thing. Set it too high and the goal feels so unattainable that shoppers stop adding to their carts. Set it too low and your margins take a hit.
PrettyDamnQuick has seen firsthand that the ideal free shipping threshold varies by category, shop, and even price point. What works for one shop won't necessarily work for another.
But after powering more than 1 billion checkouts in the last five years, we've noticed a few patterns.
The most successful brands set their free shipping threshold at 70-90% of their average order value (AOV). By "successful," we mean these shops have higher average revenue per checkout (ARPC) and higher conversion rates.
Let's say you run an apparel brand where the typical order is $100. For your brand, the sweet spot for free shipping would be between $70 and $90. That makes free shipping feel attainable while nudging shoppers to add another item to their cart.
The Ideal Threshold Varies by Category
Premium brands tend to find success with lower thresholds, around 30-50% of AOV. That reflects the higher expectations shoppers have for higher-priced brands: They're more likely to expect that shipping is included. Plus, the AOV for these types of shops is already naturally higher due to the prices of the products. Go too high with your free shipping threshold and you start to stretch buyers' wallets too much.
Categories that typically have products added at checkout, like cosmetics and food & beverage, see success with higher free shipping thresholds, closer to 90% of AOV. These items are typically low-cost enough that shoppers are more willing to add another item or two just to get free shipping.
PrettyDamnQuick's data found that free shipping thresholds above 100% of AOV don't work as well. When the goal is too hard to reach, shoppers stop adding to their carts.
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Why It's Worth Optimizing for Free Shipping
Stores that optimize their free shipping threshold can see their ARPC go up by 5-15%. They make free shipping feel like an achievement, not an expectation.
From the brand side, a successful free shipping threshold balances checkout conversion rates with ARPC, ensuring that enough customers can reach free shipping while still generating shipping revenue for you.
How to Set Your Free Shipping Threshold
- Look at Your Current Orders: Where do customer orders typically cluster? You'll want to look at AOV as well as median order value from the last 60-90 days.
- Find Your Sweet Spot: Find a range where about 40-60% of customers would qualify for free shipping.
- Check Two Key Signals: If customers are abandoning their orders right before hitting free shipping, that means your threshold is set too high. If customers are hitting the threshold exactly, it's probably set just right.
- Test Before Committing: Run an A/B test for a few weeks before deciding on a free shipping threshold. You want to make sure shoppers are spending enough to make up for the shipping revenue lost from free shipping.
- Monitor Your Numbers After Making a Change: Watch your conversion rate, average order value, and revenue per customer. You want your total revenue per customer to go up even if shipping revenue declines.
When to Change Your Free Shipping Threshold
- Lower your free shipping threshold if fewer than 40% of customers are qualifying, checkout abandonment is high, or you have a high number of orders just below the threshold.
- Raise your free shipping threshold if more than 70% of customers already qualify, shoppers aren't adding more items to qualify, or you're losing too much shipping revenue.
- Keep your free shipping threshold if your conversion rate and total revenue per customer are strong, and if you notice shoppers are actively adding items to their cart to reach it.
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Madeline Stone writes data-backed content for PrettyDamnQuick. She previously wrote about the e-commerce industry as a longtime reporter at Business Insider.
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