How to set a free delivery threshold for your shop

To set a free delivery threshold for your shop, start from your average order value and set the threshold a little above it, typically somewhere around one extra item’s worth. Then check the maths: the extra profit from bigger baskets should cover the delivery you’re now paying for. Launch it, watch your average order and margin for a few weeks, and adjust.

That’s the short version. Below is how to get to a number you can trust, and how to show it so it actually changes what people buy.

Why have a threshold at all?

Unexpected delivery costs are one of the most common reasons people abandon a basket. A free delivery threshold does two jobs at once:

• It removes the delivery charge for your bigger orders, which takes away a reason to leave.
• It gives smaller orders a reason to add one more thing.

The alternative is free delivery on everything, which is simple and very clear, but means every small order carries the full cost of postage. Whether that works depends on your prices and margins, which is what the next steps are for.

Step 1: gather four numbers

You only need a few figures, and most come straight from your shop’s reports and your courier invoices.

• Average order value (AOV): total sales divided by number of orders, over the last three to six months. Use the figure before delivery charges.
• Typical delivery cost to you: what you actually pay per parcel, including packaging and any fulfilment pick fee.
• Gross margin: the share of the price you keep after the cost of the product itself.
• How your orders spread out: roughly what share of orders fall below, around and above your average. A simple export to a spreadsheet will show this.

Step 2: pick a starting threshold

A sensible starting point is to set the threshold somewhat above your average order, so a good chunk of shoppers are close enough to reach it with one more item.

• Too low (below your average): most orders already qualify, so you pay for delivery without changing behaviour.
• Too high (far above your average): almost nobody bothers to reach it, so it does little.
• About right: lots of orders sit just under it, and the gap is about the price of a popular add-on.

Round numbers like £30, £40 or £50 are easy to remember and easy to put in a banner. Pick the round number nearest to where your maths lands.

Step 3: check the maths

Before you commit, make sure the threshold pays for itself. For an order that just reaches the threshold, ask:

1. 1What profit do I make on an order this size? (Order value × gross margin.)
2. 2Take off what delivery costs me for that order.
3. 3Is what’s left still a profit I’m happy with?

Here’s a worked example with made-up numbers. Say your threshold is £40, your margin is 50% and a parcel costs you £4 to send. An order of £40 gives £20 gross profit, and after £4 delivery you keep £16. If that’s fine for you, the threshold works. If your margin were much thinner, you might need a higher threshold or a cheaper delivery service.

Step 4: make the gap easy to close

A threshold only helps if people can reach it without fuss. Make sure you have some lower-priced items that make sense as add-ons:

• Accessories, refills, spares or consumables for your main products.
• Small gift items or multipacks.
• A slightly bigger bundle of something they’re already buying.

Then show those items where people will see them: in the basket, in a side cart, or as a “goes well with” suggestion on product pages.

Step 5: show the threshold everywhere it matters

A threshold people don’t know about can’t change anything. Mention it in these places:

• A slim bar at the top of every page: “Free UK delivery on orders over £40”.
• On product pages, near the price and the add-to-basket button.
• In the basket and side cart, with a running message: “You’re £6.50 away from free delivery”.
• On your delivery information page, with the full rules and any exclusions.
• In marketing emails and ads, where the rules for those channels allow.

The “you’re £X away” message is the most important one. It turns a vague offer into a concrete, small step.

Different countries, different thresholds

If you sell abroad, one threshold rarely fits every country. Delivery to Ireland or the US costs more and takes longer, and prices are in a different currency.

• Set a separate threshold per country, in that country’s currency.
• Base it on what delivery to that country actually costs you.
• Keep each number round in its own currency, such as €50 or $60, rather than a converted figure like €46.83.

On Merchella, each country you sell in has its own prices, currency and delivery options, so you can set a different free delivery rule for each one.

What about next-day and other paid options?

Free delivery usually means your standard service. You can still charge for faster options like next-day or Saturday delivery, even on orders over the threshold. Just label it clearly at checkout, for example “Free standard delivery (2–3 working days)” and “Next-day delivery £4.95”.

Test it, then adjust

Treat your first threshold as an experiment. After a few weeks, compare against the weeks before:

• Did average order value go up?
• Did the number of orders stay steady, or drop?
• What happened to profit per order after delivery costs?
• How many orders now land just above the threshold?

If lots of orders bunch just above the line and profit is up, it’s working. If orders dropped noticeably, the threshold may be too high. Change one thing at a time and give each change long enough to judge, ideally avoiding big sale periods that skew the numbers.

Mistakes to avoid

• Changing the threshold every week, which confuses returning customers.
• Hiding the rules, such as excluded items, until checkout. Show the full price, including delivery, before people commit.
• Raising product prices to cover free delivery without checking how that compares with competitors.
• Forgetting to update the banner, emails and delivery page when you change the number.

In short

Start from your average order, set a round-number threshold a little above it, and check that an order at that level still makes you money after delivery. Offer easy add-ons, show “you’re £X away” in the basket, use separate thresholds for other countries, and review the results after a few weeks.