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Free shipping vs. profit: when it quietly loses you money

Free shipping is one of the best conversion levers on Shopify — and one of the easiest ways to lose money without noticing. The trick is knowing where the line is.

The psychology vs. the economics

Shoppers love free shipping, so it lifts conversion and average order value. But the cost does not disappear — you absorb it. Whether that is worth it depends entirely on the order's margin.

When free shipping loses money

If the shipping you pay is more than the margin left on the order, you lose money on that sale. It happens most on heavy items, low-margin products, and small orders where there is little margin to absorb the cost.

The threshold approach

The safest way to offer free shipping is above a minimum order value — the point where the margin covers the shipping. The free shipping calculator finds that break-even order value from your margin and shipping cost.

Other options

You can also bake shipping into the product price, offer a flat rate, or limit free shipping to specific products. Whatever you choose, check the true margin on the orders it applies to.