Quick answer
A Shopify shipping margin calculation should subtract product cost, outbound shipping, fulfillment, payment fees, ad cost, return loss, packaging, and app or handling costs from order revenue. Free shipping does not remove shipping cost; it moves the cost into the merchant's margin model.
How to use the calculator
Enter the average order revenue after discounts, then add product cost, outbound shipping or fulfillment, payment fee percentage, ad cost per order, expected return loss, and other order-level costs. The result estimates net profit per order, order margin, cost share, and the ad ratio that would erase the remaining contribution margin.
Use current Shopify, payment, carrier, and fulfillment records for final decisions. This calculator is a planning model, not a replacement for Shopify reports, tax advice, carrier quotes, or accounting review. Page reviewed: July 28, 2026.
Free shipping threshold check
| Question | How to test it |
|---|---|
| Can the order absorb free shipping? | Set outbound shipping to the merchant-paid amount and confirm the final margin is still above target. |
| Should the threshold be higher? | Raise order revenue to the proposed threshold and compare margin against the normal order value. |
| Are paid ads still workable? | Compare expected ad cost per order with the break-even ad ratio and net profit result. |
Related reading
Use the Shopify shipping margin guide for threshold logic, the ecommerce pricing formula for target margin pricing, and the return cost guide when refund loss is a major margin risk.
FAQ
How do I calculate Shopify shipping margin?
Subtract product cost, outbound shipping, fulfillment, payment fees, ad cost, returns, packaging, and other order costs from order revenue. Divide the remaining profit by revenue to estimate order margin.
Does free shipping mean shipping cost is zero?
No. Free shipping means the buyer does not pay a separate shipping line. The merchant still pays carrier or fulfillment cost, so it should remain in the margin model.
What is a safe Shopify free shipping threshold?
A safer threshold is high enough that the larger order still leaves target margin after shipping, payment fees, discounts, returns, and acquisition cost. Test several order values before publishing the threshold.