How to price free shipping

Free shipping is a promise to the buyer. It does not remove the carrier or fulfillment charge from your business.

Keep the comparison fair

Imagine an item priced at $25 with $5 shipping charged to the buyer. The order brings in $30 before tax. If you change to a $30 item with free shipping, revenue is still $30. Enter the same production and fulfillment costs in both scenarios.

Under fee settings charged on the full item-plus-shipping amount, these two orders have the same estimated contribution profit. The buyer experience changes, but the basic arithmetic does not.

Discounts change the comparison

A 20% discount on the $25 item reduces revenue by $5. A 20% discount on the $30 shipping-included item reduces revenue by $6. If shipping is included in the item price, your sale may discount that part too.

Plan for different destinations

Create separate scenarios for domestic and international fulfillment. Use the actual provider quote for each product and destination. A single shipping estimate can hide loss-making orders.

If you spread shipping across a basket, this one-item calculator is only an approximation. For multi-item orders, allocate the shared shipping expense carefully and reconcile against your marketplace statement.