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How to Make Free Shipping Profitable

by: 

JP Hunt

JP Hunt is one of the founders of Inksoft, a company that offers a comprehensive business suite including an online designer, e-commerce platform and other business tools. He also is the vice president of sales and marketing. Contact Hunt at jphunt@inksoft.com or visit the Inksoft website at www.inksoft.com

No one likes to pay for shipping. Studies by consulting companies and others show a dramatic increase in a completed sale if there is free shipping. By setting a minimum order amount to qualify for free shipping, as long as it’s reasonable, you are giving the customer an incentive to increase their purchase.

Of course, you need to factor the "free" shipping into your prices. Free shipping is always based on the most economical method. It may take some pricing trial and error to determine what the most attractive and profitable price is for this to work, but once you’ve done a program like this for a period of time, you should have a good idea of what average shipping costs are going to be. One factor that offsets the cost of shipping is the fact that it requires the customer to order more. So as the average order goes up, so do profits making it financially feasible.