Test a free-shipping threshold using basket contribution, not order value alone

Write down the proposed threshold, eligible destinations, products and service level. Identify whether the qualifying amount is measured before or after discounts under the actual checkout configuration. Define the comparison: a different threshold, a flat shipping charge or the current policy. Finance needs the exact offer to estimate which orders will change.

Shopify supports free, flat and carrier-calculated shipping rates, with shipping rules varying by product and location setup. Verify the live configuration used by the test. A promise displayed on a banner and a checkout rule that applies differently can create both customer complaints and unreliable analysis.

For customers who add an item to qualify, estimate the item's net selling amount less product cost and incremental payment and fulfillment costs. Compare that contribution with shipping revenue forgone and any increase in postage. An added item can lift order value while contributing too little to cover the delivery subsidy.

In a hypothetical basket, a customer adds a $12 item costing $5, with $1 of additional payment and handling cost. Its contribution before shipping is $6. If the business gives up a $5 shipping charge and the heavier parcel costs another $2, the changed basket contributes $1 less overall: $6 less $5 less $2. This example assumes the original order would have happened without the offer.

Run separate cases for different product and destination combinations. A lightweight accessory and a bulky low-margin product can cross the same threshold with very different results. Preserve the assumptions rather than averaging away the expensive cases.

Some buyers already planned to spend above the threshold. Giving those buyers free shipping can reduce contribution without increasing the basket. Estimate that population separately from genuinely changed orders and newly converted buyers. A simple before-and-after average order value cannot isolate these effects when traffic, prices or promotions also changed.

Use a controlled test where practical and compare completed, mature orders after cancellations and returns. Track conversion, contribution per visitor or eligible customer, and total contribution alongside order value. Keep the experiment's traffic and eligibility rules documented so a result from one region is not applied to another with different shipping costs.

Inspect split shipments, service upgrades and later carrier adjustments for the test population. Free shipping may be economically different when the added item ships from another warehouse. Include the actual packaging and postage evidence once available, and flag the immature orders whose final costs remain uncertain.

Choose the threshold using the business's contribution objective and customer promise, with limits supported by the storefront. Document the decision and expected outcome, then compare the next period with the same definitions. If the business accepts lower immediate contribution for a specific growth goal, state that tradeoff and monitor the evidence needed to judge whether the expected later benefit occurs.