ECOMMERCE TOOL / 52
Offer free shipping.
Keep the margin.
Estimate the minimum order value where free shipping can absorb delivery and advertising costs while preserving your target contribution margin.
This is a contribution-margin estimate. Test it against average order value, product mix, returns, and customer behavior before changing a store policy.
Advertisement
QUICK ANSWERS
What does the threshold mean?
Orders above the result should have enough contribution margin to absorb the shipping and ad cost assumptions while meeting the target margin.
Why is the threshold sometimes unreachable?
If fees and the target margin consume all of the product margin, no order value can satisfy the assumptions.