Free Shipping vs Charging Shipping
Free shipping reliably improves conversion. It also reliably reduces margin, and on marketplaces that calculate commission on the total the buyer pays, it can leave your fee unchanged while your revenue drops. Both effects are real; the question is whether the first outweighs the second for your product.
What actually changes
Compare a $30 item with $6 shipping, two ways.
Charging shipping: buyer pays $36. On a platform that charges commission on the order total, a 9% fee is $3.24. You post the item for $6. Revenue $36, costs $9.24 plus item cost.
"Free" shipping at $36: buyer pays $36, same fee of $3.24, same $6 postage. Identical economics — you have simply moved the number into the price. This is the version that works.
"Free" shipping at $30: buyer pays $30, fee $2.70, and you still pay $6 postage. You have given away $6 of revenue to save $0.54 of fee. Margin falls by roughly $5.46 per order.
The rule
Free shipping is a pricing decision, not a shipping decision. Either you raise the price to absorb the postage, or you accept a lower margin in exchange for higher conversion. Deciding to offer it without touching the price is choosing the second option by accident.
When absorbing it is genuinely worth it
- Your margin is wide enough to fund it. A $6 hit on a $19 contribution margin is survivable; on a $7 one it is not.
- It lifts average order value. A free-shipping threshold ("free over $45") frequently pushes basket sizes above the threshold. The extra contribution can more than cover the postage.
- Your competitors all offer it. Then it is table stakes and the real question is whether your price can carry it.
When to charge it
Heavy or bulky items, low-priced items where postage rivals the product cost, and international orders with unpredictable rates. Trying to hide a $14 postage cost inside a $22 product does not work — the price stops being competitive and you lose the sale anyway.
Model the threshold version
The strongest option for most small sellers is a free-shipping threshold set slightly above current average order value. Calculate the contribution margin on a typical two-item order, subtract the postage, and confirm the result still clears your floor. If it does, the threshold pays for itself; if it does not, set the threshold higher rather than abandoning the idea.
Do the calculation
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