Free Shipping vs Discount Conversion Calculator

What the formula says

The comparison is contribution per session under each offer: (conversion rate × contribution per order) for free shipping against the same for an equivalent discount.

Free shipping costs the shipping charge on every order that takes it. A percentage discount costs a share of the order value, which scales with basket size.

The two therefore cost different amounts on the same order, and which is cheaper depends on the average order value.

The numbers, worked through

At a $58 order with $9.85 of shipping, free shipping costs $9.85, 17% of the order. A 10% discount costs $5.80.

So the discount is cheaper here, and free shipping typically converts better. If free shipping lifts conversion from 2.5% to 3.1% and the discount to 2.8%: free shipping gives 1,240 orders at $22.05 of contribution, $27,342. The discount gives 1,120 at $26.10, $29,232.

The discount wins on these numbers, despite converting worse, because it costs less per order.

At a $40 order value the picture reverses: free shipping still costs $9.85 while the discount costs only $4, but the conversion gap widens because shipping is a larger share of the total.

What the number leaves out

The conversion difference is the whole comparison and it is business-specific. Assuming free shipping converts better without testing it is the usual error, and it frequently does by less than expected on a store where shipping is already cheap.

Free shipping thresholds also change order value, which the simple comparison ignores, a threshold at $75 pushes baskets upward and changes both terms.

Turning it into a decision

Test both against revenue per visitor rather than conversion, since they affect order value differently and conversion alone will pick the wrong one.

Then consider the threshold version rather than either extreme. Free shipping above a level slightly higher than current average order value captures much of the conversion benefit while raising basket size.

Why free shipping converts better than an equivalent discount

The evidence is consistent across categories: a shipping charge presented as a separate line at checkout suppresses conversion more than the same amount removed from the product price.

The usual explanation is that the shipping charge feels like paying for nothing: the customer is buying a product, not a delivery, and it arrives late, when the decision has already been made.

That framing effect is real and it does not mean free shipping is always right. It means the comparison has to weigh a genuine conversion advantage against a genuine cost disadvantage, and on higher order values the cost side frequently wins.

Competitor practice constrains the choice more than the arithmetic does in categories where free shipping has become the default expectation.

Where every alternative offers it, charging for delivery is a visible disadvantage at the comparison stage, and the calculation becomes about how to fund it rather than whether to offer it.

Modelling both against the order value distribution rather than the average matters, since the two offers cost different amounts at different basket sizes and the average conceals that entirely.