Free tool · Marketing
Shipping and free-shipping calculator
Shipping is where small online sellers quietly lose their margin. Put in your average order and what your courier charges, and see what free shipping really costs you.
Shipping calculator
Before shipping. Excl. GST if registered.
Price less product cost.
What NZ Post or your courier charges you.
Box, bag, tape, label.
- Profit, they pay shipping
- $28.50
- Profit, free shipping
- $19.00
- Shipping + packing eat
- 37% of margin
- Free shipping from
- $80
At $79.00 an order with free shipping makes the same profit as an average order where the customer pays shipping. Rounded up to $80.
The short answerTo set a free-shipping threshold that doesn't cost you money, divide your shipping cost by your gross margin and add it to your average order value. With a $60 average order, a 50% margin and $9.50 shipping, that's $60 + $19 = $79. Orders above that cover their own shipping. Below it, either charge for shipping or build it into your prices.
How do I set a free-shipping threshold?
Free shipping works when it nudges people to add a bit more to the cart. The extra margin on those extra items has to pay for the parcel.
- Find your average order value before shipping (excluding GST, if you're registered).
- Find your gross margin: price less what the products cost you, as a percentage of price.
- Divide your average shipping cost by the margin, then add that to the average order. That's the break-even threshold.
- Round it up to a tidy number, such as $80 rather than $79.
The lower your margin, the higher the threshold has to be. With $9.50 shipping and a $60 average order:
| Gross margin | Sum | Threshold |
|---|---|---|
| 30% | $60 + $9.50 ÷ 0.30 | $92 |
| 40% | $60 + $9.50 ÷ 0.40 | $84 |
| 50% | $60 + $9.50 ÷ 0.50 | $79 |
| 60% | $60 + $9.50 ÷ 0.60 | $76 |
Should I charge for shipping or make it free?
- Charge the real cost. Honest and safe for your margin, but more people abandon carts at checkout.
- A flat rate. One simple price for all of NZ. Set it near your average cost, so cheap parcels cover the dear ones.
- Free over a threshold. The most common choice. It lifts order sizes, as long as the threshold is set from your numbers (above).
- Always free. Only works if shipping is built into every price. Check your margins with the margin calculator first.
When are the Christmas shipping cut-offs?
NZ Post and the couriers each publish last sending dates for Christmas delivery. They differ for urban, rural and the South Island, and international dates are weeks earlier. Check NZ Post's Christmas sending dates and your courier's, then put your own cut-off a day or two ahead of theirs on your website and checkout.
Be careful what you promise. Under the Fair Trading Act, a delivery date on your site has to be one you can actually meet. "Order by 15 December for Christmas delivery" is fine if it's true.
Questions owners ask
How do I work out a free shipping threshold?
Divide your average shipping cost by your gross margin, then add the result to your average order value. With $9.50 shipping, a 50% margin and a $60 average order, the threshold is $60 + $19 = $79. An order at that value earns the same profit with free shipping as an average order where the customer pays.
How much does shipping cost in New Zealand?
It depends on the size, weight, distance and speed, and whether the address is rural. Get quotes from NZ Post and a couple of couriers for your usual parcel, and use your real average from recent orders. Business accounts and shipping apps often get better rates than counter prices.
Do I charge GST on shipping?
If you're GST-registered, yes. A delivery charge to a New Zealand customer is part of what you're selling, so it carries 15% GST like the goods. Goods exported overseas are usually zero-rated. Check IRD's guidance on charging GST if you're unsure.
Should a small online shop offer free shipping?
Often, but only above a threshold set from your own numbers. Free shipping on every order can wipe out the profit on small orders. A threshold a little above your average order lifts what people spend and keeps each order profitable.
What if a Christmas parcel arrives late?
Promise only what you and your courier can deliver, and say clearly when your Christmas cut-off is. If you advertise a delivery date and miss it, you may have to put things right under the Consumer Guarantees Act and the Fair Trading Act. Build in a buffer before the couriers' last dates.
General information, not financial advice. The calculator uses the numbers you enter. Shipping rates and Christmas dates change, so check them with NZ Post or your courier.
Where's this from?
- NZ Post: Christmas sending dates
- NZ Post: Sending within NZ for business
- IRD: Charging GST
- Consumer Protection: Fair Trading Act
- business.govt.nz: Pricing workbook
Checked against these sources on 7 November 2026 by MySMB Editorial. Spotted a mistake? Tell us and we'll fix it.
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