📬 Shipping Thresholds 📬
Raise your hand if you have a free shipping threshold! 🙋🏻♀️ Raise your other hand if you used a formula to determine that threshold! 🙋🏻♀️ It's ok if you didn't. Imma help you out. Read on...
Some of y'all are out here charging BANANANANAS rates for shipping. Literally it's bonkers! Trust me, I realize that shipping is expensive AND I realize you are not Amazon. There can be a happy medium.
Step one: Review your Average Order Value which can be found in the reporting section of your website. Let's say it's $60.
Step two: Determine your average cost of shipping. Even if you do not charge by weight, you should be shipping by weight on the back end. This will save you mountains of money. Let's say your average cost is $7.
Step three: Determine your gross profit margin. We will say this one is 60%.
Step three: Make it make sense. :) This person should have a free shipping threshold of no more than $70.
70-60 = 10 (threshold - AOV)
10*.60 = 6 (difference * profit margin)
7-6 = 1 (av shipping - difference)
This person will pay $1 to ship packages that meet the free shipping threshold.
Average order value + average cost of shipping then round up!
In either case, your customer will view the free shipping threshold as tangible. They will be scrolling your website looking for an item that costs about the same as shipping or what it would take to get free shipping because we'd all rather have something else in the package than pay for shipping.
The other point I'd like to make about shipping it needs to make sense. $7 for a t-shirt or a slinky dress is a big pass for me. We all know there is a first class option for things under a pound. ;)