Guide
Should You Offer Free Shipping?
Buyers like free shipping, and someone still pays the carrier. Here is how to work out whether your shop can afford it, and how to offer it without giving away your profit.
What it really costs
Take an average order of $32.00 where the products cost you $13.00. Your profit is $19.00. If postage and packing cost $5.50 and you pay it, your profit falls to $13.50.
That $5.50 is 28.9% of the profit on the order. Free shipping on everything means giving up more than a quarter of what you earn.
Three ways to offer it
Free over a set order value. Postage is free once the basket passes a threshold. Customers add an item to reach it, and the larger order pays for the postage.
Built into the price. You raise prices a little and ship free. The buyer sees one simple total.
Free on selected products. Offer it only on items with enough margin to carry the postage.
Setting a threshold
In the example above your margin is 59.4%. To earn back $5.50 of postage you need about $9.26 more in sales, because 59.4% of $9.26 is $5.50. So a threshold of $41.26 or more leaves you no worse off.
Round it to a figure that is easy to read, and set it above your average order so that it changes what people buy.
When to charge for postage
When your products are heavy or bulky, when your margin is thin, or when most orders are for a single low-priced item. Charging the real cost is honest, and buyers accept it when the price of the product is fair.
