Should I offer free shipping on all orders or use a minimum spend threshold?

The question isn't whether to offer free shipping, but how to use shipping policy to engineer a more profitable business. The common wisdom that you must offer universal free shipping to compete is a dangerous oversimplification that costs brands a fortune. The most effective tool isn't "free shipping," it's the free shipping threshold.

I get why so many founders feel backed into a corner on this. For years, the prevailing advice has been that customers expect free, fast shipping on everything. As Nick Raushenbush mentioned on Honest Ecommerce, the expectation is so ingrained that many people just advise baking the shipping cost directly into your product prices so the customer never sees a separate line item at checkout. It seems like a simple way to reduce cart abandonment and remove a point of friction.

But treating shipping as only a cost to be hidden misses the massive opportunity to use it as a profit lever. Adam Kitain on an episode of Honest Ecommerce pointed out that the free shipping threshold is an incredible driver for increasing Average Order Value. The goal isn't just to make the sale, it's to make the sale more profitable. Jay Myers on Shopify1Percent and Lachezar Voynov on 2X eCommerce Podcast both give the exact same, powerful advice: calculate your current AOV, then set your free shipping threshold just a bit higher, maybe $10 or $15 over. If your average cart is $35, a $50 threshold encourages customers to add one more small item to their cart to "earn" the free shipping, increasing your AOV and gross margin dollars in one move. Setting it at an arbitrary $100 is a rookie mistake.

Furthermore, the idea that you must offer it is just false. On eCommerce Evolution, Patty McLaren made the point that for some businesses, shipping can be a significant revenue stream. She’s seen tests where charging for shipping had little negative impact on conversion but created a 25% lift in revenue. Not every business can or should do this, but it proves you have to test it. Michelle McNamara also noted on Future Commerce that for many merchants, shipping costs make up 15% or less of their AOV, which is a useful benchmark. But she was quick to say that you're not alone if you can't feasibly offer free shipping, because there is no one-size-fits-all answer.

So, what should you do instead? First, stop thinking of shipping as a pure cost center. It's a key part of your pricing strategy and a powerful tool for customer behavior. Start by calculating your true AOV and your contribution margin. Then, set a threshold that’s slightly out of reach for the average customer, forcing a small upsell. Use your on-site messaging to make this threshold obvious throughout the shopping journey. This is a classic tactic for checkout optimization. And if you sell large, heavy items where free shipping is a non-starter, take Jay Myers’s advice and test an alternative incentive like, "Spend $100 and get a $15 gift card for a future purchase." It can still drive the AOV lift you're looking for without killing your margins. The key, as always, is A/B testing implementation to find what works for your specific numbers.