Ecommerce Free Shipping Profit Calculator
See how absorbing shipping costs affects profit per order, profit margin, and the selling price needed to protect your target margin.
Free shipping impact
Pricing detail
See the real profit cost of offering free shipping
Use this calculator when the customer sees free shipping but the business still pays the carrier or fulfillment cost behind it.
The calculator compares profit before absorbed shipping with profit after the business takes on the shipping cost.
It also calculates the break-even selling price and the minimum selling price required to maintain your target gross margin with free shipping included.
Free shipping is not economically free. The useful question is whether the existing selling price and margin can absorb the shipping cost.
How the calculation works
The same order is evaluated before and after the shipping cost is absorbed by the business.
Calculate non-shipping order economics
Product, fulfillment, packaging, other variable costs, fees, and advertising are combined.
Add absorbed shipping
The shipping cost paid by the business is added to total order cost.
Measure the margin impact
Profit and margin before and after absorbed shipping are compared.
Calculate required pricing
The calculator finds the break-even price and the minimum price needed for the selected target margin.
Example free shipping calculation
Suppose a $60 order includes $4 of shipping paid by the business:
Profit with free shipping is $23.15 and margin is about 38.6%. Absorbing shipping reduces profit by exactly $4.00. Break-even selling price is about $36.38, while the minimum price needed for a 30% target margin is about $52.43.
What each result means
The result shows whether shipping is merely reducing profit or actually threatening your pricing floor.
Profit with free shipping
Final per-order profit after the shipping cost paid by the business.
Profit reduction from shipping
The direct difference between profit before and after absorbed shipping.
Break-even selling price
The minimum price that covers the included costs with free shipping but leaves no profit.
Minimum price for target margin
The selling price required to maintain the selected gross margin after shipping is absorbed.
Free shipping questions
Common questions when evaluating free-shipping offers.
Should customer-paid shipping be entered here?
No. This calculator focuses on the shipping cost absorbed by the business. If the customer fully reimburses shipping, the economics are different.
What if I offer free shipping only above a threshold?
Evaluate the typical order at or above that threshold. A dedicated shipping-threshold calculator can compare multiple order values later.
Should shipping be included in gross margin?
If the business pays shipping as a variable cost of the order, including it gives a more complete view of order profitability.
Why can the minimum price for target margin be below my current price?
That means the current selling price already exceeds the price needed to maintain the selected target margin.