What Is Free Shipping? Who Really Pays for It

Who Pays When Shipping Is Free

The carrier still charges for every parcel. Free shipping just changes who sees the bill. Your shopper doesn't pay a fee at checkout anymore. You do, and there are three ways to cover it:

Out of your margin. Prices don't change, so you earn less on each order.
Inside your prices. You nudge product prices up a bit so they carry the shipping cost.
With a minimum order. Only bigger carts ship free, and the extra sales help pay for it.

People call that last one a free shipping threshold. It's free shipping with a minimum order amount attached. Plain free shipping can cover every order, even a single small item.

There are other limits you can set, too. Some stores offer it for one sale weekend, or only to one country. Others make standard delivery free and still charge extra for express.

Free Shipping on a Shopify Store

Shopify gives you two main ways to do it. You can go to Settings > Shipping and delivery and give a shipping zone a $0 rate. Or you can set up a free shipping discount in the Discounts section, the same way you'd make a code for a sale.

A lot of Shopify themes put a note in the cart that says shipping is calculated at checkout. Turn on free shipping without telling anyone, and a shopper might not find out until the last step. That's why many stores also mention it in an announcement bar or on product pages.

What Free Shipping Does to a $40 Order

Example: Say you sell a $40 candle set. It costs you $20 to make, so you keep $20 per sale. Shipping runs you $8 a box. Right now the shopper pays that $8, and you sell 100 sets a month.

Setup	Shopper pays in total	Your profit per order	Orders needed for $2,000 profit
$40 price + $8 shipping	$48	$20	100
$40 price, free shipping	$40	$12	About 167
$48 price, free shipping	$48	$20	100

Pay the $8 yourself and each order earns $12, not $20. You'd need about 167 orders to make the same $2,000 a month. That's two-thirds more orders just to stand still.

Raise the price to $48 and you're back to $20 an order. And look at what the shopper pays: $48 either way. All that changes is whether the $8 sits inside the price or on its own line. Will that win you more orders? You'd have to test it in your own store.

When Free Shipping Doesn't Pay Off

Low-priced items. On a $15 item with a 50% margin, you keep $7.50. An $8 shipping bill wipes that out.
Heavy or bulky products. Shipping costs go up with weight and size, and your price might not keep pace.
Far-away places. Getting a box to some countries costs a lot more than sending it across town. If everything ships free, you can lose money on those orders.
Shoppers who were buying anyway. Some visitors show up ready to buy. Give free shipping to everyone and you're paying shipping on their orders too. Our guide covers how dedicated buyers differ from walk-away customers.

Rather set a minimum order than ship everything free? See our Shopify free shipping threshold guide.

Misconception: More Orders Means It Paid Off

Orders went up after you added free shipping, so it worked, right? Not always. Go back to the candle example. You needed about two-thirds more orders just to earn the same profit. A smaller bump can mean more work for less money. Orders can also climb for other reasons, like a busy season or a new ad. So judge it by profit after shipping, and compare against a similar stretch of time.