Calculator Inputs
Enter your store economics to estimate a reachable and margin-aware threshold.
Example Data Table
Illustrative benchmarks for different store profiles.
| Store Type | Current AOV | Gross Margin | Shipping Cost | Handling Cost | Payment Fees | Suggested Threshold |
|---|---|---|---|---|---|---|
| Boutique Fashion | $58.00 | 62% | $7.90 | $2.10 | 3.1% + $0.30 | $70.00 |
| Beauty and Skincare | $41.00 | 68% | $5.80 | $1.60 | 2.9% + $0.30 | $50.00 |
| Home Goods | $93.00 | 54% | $12.40 | $3.20 | 2.9% + $0.30 | $120.00 |
Formula Used
Current contribution per order = (Current AOV × Gross Margin %) − (Current AOV × Payment Fee %) − Fixed Payment Fee − Handling Cost
Desired contribution floor = Current Contribution × Contribution Floor %
Profit-based threshold = (Desired Contribution + Shipping Cost + Handling Cost + Fixed Payment Fee) ÷ (Gross Margin % − Payment Fee %)
AOV lift threshold = Current AOV × (1 + Target AOV Lift %)
Minimum step threshold = Current AOV + Minimum Cart Increase
Recommended threshold = Round Up [maximum of the three thresholds] to your chosen pricing step
Monthly shipping subsidy = Monthly Orders × Qualifying Order Rate × Shipping Cost
Extra revenue from threshold gap = Qualifying Orders × (Recommended Threshold − Current AOV)
How to Use This Calculator
- Enter your current average order value and blended gross margin.
- Add the real shipping, handling, and payment costs you expect on qualifying orders.
- Set a realistic AOV lift goal and the contribution floor you want preserved.
- Choose a minimum cart increase and a rounding step that fits your pricing strategy.
- Add average item price and monthly orders for practical basket and impact estimates.
- Click Calculate Threshold to see the recommendation above the form.
- Review the dominant driver, contribution impact, and monthly subsidy estimate.
- Use the CSV or PDF buttons to save the results for testing, reporting, or team review.
FAQs
1. What does this calculator estimate?
It recommends an order value where free shipping can encourage larger carts without weakening contribution margin. It compares profitability, lift targets, fees, and fulfillment costs.
2. Should the threshold equal current AOV?
Usually no. A threshold equal to current AOV changes little shopper behavior. Most stores set it slightly above normal spend so customers add one more item.
3. Which inputs matter most?
Gross margin, shipping cost, handling cost, and payment fees matter most. Small changes in these inputs can move the recommended threshold meaningfully.
4. Is a higher threshold always better?
No. A threshold that feels unreachable can lower conversion and increase abandonment. The best threshold protects margin while still feeling achievable to shoppers.
5. How often should I review the number?
Review it whenever carrier rates, packaging, pricing, or margins change. Quarterly is common, while fast-moving stores often reassess monthly.
6. Can I use this for bundles or subscriptions?
Yes. Use blended AOV, blended gross margin, and the true shipment cost. For bundles, include discount effects and packaging in your inputs.
7. Should taxes be included in the threshold?
Usually no. Most stores base thresholds on pre-tax merchandise totals because tax varies by location and does not improve contribution.
8. Is this result final for pricing decisions?
No. This is a planning model. Validate the chosen threshold with A/B tests, margin checks, repeat purchase data, and abandonment trends.