Shipping Subsidy Calculator
What partly-funded shipping costs across a month.
Monthly shipping subsidy
$1,350
$2.25 per order
This is funded entirely from margin and rarely appears as its own line in the accounts, which is how it grows unnoticed.
How the Shipping Subsidy Calculator works
Charging £3.95 when shipping costs you £6.20 is a subsidy of £2.25 an order, and across a month it is a real line in the accounts that rarely appears as one. Quantifying it is usually what prompts either a threshold or a price adjustment.
Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price — check the platform's current fee schedule before you price a product against it. This is not tax or business advice.
Frequently asked questions
How do I calculate the subsidy?
(True shipping cost − what you charge) × orders. £2.25 across 600 orders is £1,350 a month funded entirely from margin.
Is subsidising shipping ever right?
Yes, when it buys conversion worth more than it costs. A flat charge below cost can lift conversion enough to pay for itself — but only if you measure the lift rather than assume it.
How do I reduce the subsidy without hurting conversion?
A free shipping threshold above your average order value, so small orders pay and large ones do not. That captures most of the conversion benefit while removing the subsidy on the least profitable orders.
Should the subsidy be in cost of goods or marketing?
A defensible case exists for treating it as a marketing cost, since it is bought conversion. What matters more is that it appears somewhere — subsidies buried inside a shipping line are the ones that grow unnoticed.
Related calculators
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What to charge for shipping, and whether it covers cost.
OpenShipping Cost Per Order Calculator
Average shipping cost across a month of orders.
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