How to price a product with free shipping
Free delivery to the customer still has a cost to the seller. Treat it as part of the order before choosing a price.
Open the Shipping Profit Calculator →Start with what it costs to send the order
Use the charge for the parcel you actually send, including its packed dimensions and weight. Then add the envelope or box, protective materials and any handling cost you want the product to cover. A delivery label on its own rarely describes the whole fulfilment cost.
Free shipping means the buyer is not charged a separate delivery amount. The cost still comes out of the order. Set buyer shipping to zero and enter your postage expense in the product profit calculator. That makes its effect on contribution visible.
Compare the complete buyer price
A £20 item plus £4 delivery brings in £24 before entered tax. A £24 item with free delivery also brings in £24. If the same percentage fees apply to both item and delivery, changing the label alone may leave contribution unchanged. Verify the actual fee base rather than assuming that a separate postage charge avoids fees.
Moving from £20 plus £4 delivery to £20 with free delivery is a different offer: it cuts order revenue by £4. That loss needs to fit your margin or be supported by evidence that the offer improves the business. A higher conversion rate is a testable possibility, not an automatic outcome.
Check small baskets and distant destinations
An offer that works for two lightweight items can fail for one heavy item. Test the order sizes your customers really place and the destinations you serve. Where parcel charges change in steps, enter the correct charge for each scenario rather than averaging away the expensive cases.
For bundles, packaging may be per item while postage is paid once per order. Use order quantity carefully. If three products fit into one parcel, charging three full postage costs will overstate the cost; entering only one item's product cost will understate it.
A worked example
A £20 product with £8 product cost, £0.50 packaging and £3 postage leaves £8.50 before fees. Offering free delivery does not remove that £3 cost.
Before you use the result
- Use the packed parcel's actual service and destination.
- Include the packaging used for that order size.
- Compare total buyer revenue under each offer.
- Check applicable fees on postage and the item price.
- Test the smallest order and the most expensive supported destination.
Common questions
Should I simply add postage to my item price?
That is a useful starting scenario, but check seller fees, discounts and entered tax treatment at the resulting price. A percentage discount on an all-in price can also reduce the amount that was intended to cover delivery.
Does free shipping always increase sales?
It may appeal to some buyers, but the effect depends on your products and audience. Compare actual conversion, order size and contribution over a sensible test period. A busier shop with lower total contribution has not necessarily benefited.
Put the numbers into practice
Shipping Profit Calculator →How to calculate packaging cost per order →How to price a product bundle after packaging and postage →How many extra sales does a discount need? →A practical calculation guide, not professional accounting, legal or tax advice. Examples are illustrative unless identified as official. Calculation methodology and limitations.