Free shipping threshold calculator
A threshold at or below the current average order value gives free shipping to orders that were coming anyway, which is pure cost. The point of a threshold is to move the basket, so it wants to sit fifteen to twenty per cent above the current average — close enough that adding one more item gets there, far enough that most orders do not already qualify.
A free-shipping threshold has to cover the postage out of gross margin, not out of revenue. At a 45% margin, a 6 shipping cost needs 13.33 of order value just to break even — and the threshold should sit 15–20% above your current average order value to actually move behaviour.
How to set a free shipping threshold
Two failure modes bracket the right answer. Set the threshold too low and you subsidise orders that would have happened anyway, straight off the bottom line. Set it too high and nobody reaches it, so it does not shift behaviour and simply reads as expensive delivery. The sweet spot is close enough above the current average that one extra item gets a customer there. Watch what happens to the distribution rather than the average: a successful threshold produces a visible pile-up of orders just above it.
Questions
About 15–20% above your current average order value, and above the point where margin covers the postage.