{"id":1007,"date":"2018-01-18T15:58:00","date_gmt":"2018-01-18T15:58:00","guid":{"rendered":"https:\/\/www.shipbob.com\/uk\/blog\/theres-no-thing-free-shipping-right-ecommerce-pricing-strategy\/"},"modified":"2025-10-08T21:22:10","modified_gmt":"2025-10-08T21:22:10","slug":"theres-no-thing-free-shipping-right-ecommerce-pricing-strategy","status":"publish","type":"blog","link":"https:\/\/www.shipbob.com\/uk\/blog\/theres-no-thing-free-shipping-right-ecommerce-pricing-strategy\/","title":{"rendered":"There\u2019s No Such Thing as Free Shipping: How to Choose the Right Shipping Pricing Strategy"},"content":{"rendered":"\n<div class=\"wp-block-shipbob-blocks-single-toc single-toc\" data-controller=\"blog-toc-controller\" data-action=\"scroll@window-&gt;blog-toc-controller#scrollChanged:passive\" id=\"toc-component\"><div class=\"single-toc-overview\"><p>Table of Contents<\/p><div class=\"single-toc-read-time\"><p>** Minutes<\/p><\/div><\/div>\n<p><a href=\"#h-considerations-for-free-shipping-of-online-orders\">Considerations for free shipping of online orders<\/a><\/p>\n\n\n\n<p><a href=\"#h-conclusion\">Conclusion<\/a><\/p>\n\n\n\n<p><a href=\"#h-learn-more\">Learn more<\/a><\/p>\n<\/div>\n\n\n\n<p>Just as the popular economist adage states, \u201cThere\u2019s no such thing as a free lunch,\u201d there is also no such thing as <a href=\"https:\/\/www.shipbob.com\/blog\/how-to-offer-free-shipping-ecommerce-store\/\">free shipping<\/a>. As online retailers know, it can be very expensive to ship a box from Point A to Point B. And shipping carrier rates continue to increase over time. One way or another, someone has to pay for the <a href=\"https:\/\/www.shipbob.com\/ecommerce-shipping\/calculate-shipping-costs\/\">cost of shipping<\/a>.<\/p>\n\n\n\n<p>Offering something for free influences online consumer behaviour, and customers want to think they are getting a good deal. Maybe you\u2019ve chosen to fly with an airline that gives you a free checked bag. The reality is that the perceived savings are typically hidden or inflated somewhere else.<\/p>\n\n\n\n<p>Retailers that offer free shipping to customers should really call it a \u201dshipping-included\u201d price. This strategy is used so there are no surprises at checkout.<\/p>\n\n\n\n<p>Think about it: How many times have you gotten through nearly the entire process of making a purchase online, only to find yourself outraged by the shipping charge on the last page?<\/p>\n\n\n\n<p>It\u2019s easy to want to jump on the free shipping bandwagon since it is highly desired by customers. A <a href=\"https:\/\/www.walkersands.com\/press-room\/study-nearly-a-third-of-consumers-now-shop-online-at-least-once-per-week\/\">Walker Sands survey<\/a> found that 90% of consumers view&nbsp;free shipping as the top incentive&nbsp;that would encourage them to shop online more often.<\/p>\n\n\n\n<p>Similarly, a <a href=\"https:\/\/futurepay.com\/wp-content\/uploads\/2017\/01\/FuturePay-The-Big-Ticket-Report-2017-1.pdf\">FuturePay survey<\/a> found that 86% of people abandon their shopping cart because of the cost of shipping.<\/p>\n\n\n\n<p>Yet, offering free shipping goes back long before the days of e-commerce. Originally used as a promotion strategy for mail order catalogues, it has since become a <a href=\"https:\/\/www.profitwell.com\/blog\/saas-pricing\" target=\"_blank\" rel=\"noopener\">standard pricing model.<\/a><\/p>\n\n\n\n<p>When you think of free shipping today, you most likely think of Amazon Prime. Amazon has defined and set the expectations of online deliveries for retailers and consumers alike. Amazon Prime members benefit from <a href=\"https:\/\/www.shipbob.com\/blog\/guide-offering-affordable-2-day-shipping\/\">free shipping and two-day deliveries<\/a>, without having to spend a certain amount of money. However, Prime members do have to pay $99 a year for their Prime membership.<\/p>\n\n\n\n<p>But even for the largest of e-commerce giants, shipping is far from free. According to a <a href=\"https:\/\/www.geekwire.com\/2017\/true-cost-convenience-amazons-annual-shipping-losses-top-7b-first-time\/\">GeekWire analysis<\/a> of Amazon\u2019s financial results from Q4 2016, Amazon lost $7.2 billion on shipping costs in 2016.<\/p>\n\n\n\n<p>So, why do they continue to offer free shipping? To beat their competitors, maintain their large market share, acquire new customers, meet consumer expectations, and encourage members to buy more from them.<\/p>\n\n\n\n<p>Due to their immense order volume, they are able to negotiate much steeper discounted shipping rates with couriers. However, these shipping costs are still a large expense. Small businesses simply cannot compete with this or do this by themselves; Offering free shipping will take a harder hit on a small company\u2019s bottom line.<\/p>\n\n\n\n<p>Playing the free shipping game means finding the right balance of driving more conversions and not breaking the bank. So, what options do small to mid-sized online retailers have?<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-considerations-for-free-shipping-of-online-orders\">Considerations for free shipping of online orders<\/h2>\n\n\n\n<p>Here is what should ecommerce businesses do to determine if free shipping is right for them.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-1-be-realistic-about-your-margins\">1. Be realistic about your margins<\/h3>\n\n\n\n<p>Your profit margins will be the most important consideration when it comes to offering discounted shipping to customers. The question isn\u2019t around if you should offer free shipping, but whether you can afford it.<\/p>\n\n\n\n<p>For cheaper items, you simply can\u2019t absorb the cost of shipping. If your product costs $6 and the cost of shipping is $8, you are going to lose money by offering free shipping. Your margins may differ across products, depending on the cost of manufacturing, as well as the size and weight of different items.<\/p>\n\n\n\n<p>It may also depend where your customers are located. If you ship internationally, it is going to be much more expensive. Calculate how much extra sales you\u2019ll need to make up for reduced profits per order.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-2-increase-the-price-of-your-products\">2. Increase the price of your products<\/h3>\n\n\n\n<p>If you offer free shipping, there\u2019s a good chance you will need to raise your prices to make up the money you\u2019re losing. Again, you\u2019ll need to do the math and calculate the necessary markup.<\/p>\n\n\n\n<p>Another important consideration is if increasing the price tag will result in you losing more customers than you gain by offering $0 on shipping.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-3-offer-a-minimum-order-requirement\">3. Offer a minimum order requirement<\/h3>\n\n\n\n<p>By offering a free shipping threshold, retailers can <a href=\"https:\/\/www.shipbob.com\/blog\/average-order-value\/\">increase the average order value<\/a> and make customers feel like they are getting a good deal.<\/p>\n\n\n\n<p>For this to be effective, the minimum amount spent to qualify for free shipping should be larger than your average order size.<\/p>\n\n\n\n<p>According to a <a href=\"https:\/\/www.ecommercebytes.com\/2018\/01\/13\/shippo-survey-results-highlight-popularity-free-shipping\/\">Shippo survey<\/a>, 93% of shoppers will take action to qualify for free shipping, with the top action as adding items to their cart.<\/p>\n\n\n\n<p>If shoppers are trying to hit a minimum threshold, they may be trying to stock up or they are spending more because they know they will likely return some of these items.<\/p>\n\n\n\n<p>If this happens, you may need to make your returns policy stricter and determine if you will lose money on sales that are returned from offering free shipping in the first place.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-4-make-customers-pay-for-the-cost-of-shipping\">4. Make customers pay for the cost of shipping<\/h3>\n\n\n\n<p>Many retailers still pass the full cost of shipping onto their customers as a line item. While there are potential repercussions for this in the form of abandoned shopping carts, at least you can be sure to cover your costs.<\/p>\n\n\n\n<p>With new technology comes more possibilities, including real-time shipping estimates from connecting your checkout to your shipping solution. This way, your customers will be given a dynamic shipping quote based on the items in their cart and by inputting their postcode.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-conclusion\">Conclusion<\/h2>\n\n\n\n<p>When it comes to online purchases, retailers must decide how they will price their products in a way that is attractive to customers and feasible for their business.<\/p>\n\n\n\n<p>With so many factors that go into pricing, there is no one-size-fits-all approach for offering free shipping.<\/p>\n\n\n\n<p>It may make sense for some merchants to offer free shipping only when a minimum amount of money is spent, while others may be able to bake the cost of shipping into their product. Having the right <a href=\"https:\/\/www.shipbob.com\/ecommerce-fulfillment\/\">ecommerce fulfilment<\/a> strategy in place in key.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-learn-more\">Learn more<\/h2>\n\n\n\n<p>Learn how to compete with giant retailers by meeting customer expectations around 2-day shipping.<\/p>\n\n\n\n<p>Download the \u201c<a href=\"https:\/\/resources.shipbob.com\/shipbob-2-day-express-booklet\">ShipBob 2-Day Express Shipping<\/a>\u201d guide or request a quote to get started with ShipBob.<\/p>\n\n\n\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/www.shipbob.com\/quote\/\" target=\"_blank\" rel=\"noreferrer noopener\"><strong>Request a Quote<\/strong><\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Online retailers must find the right pricing strategy for their business and decide whether they will offer the illusion of free shipping to customers.<\/p>\n","protected":false},"author":110,"featured_media":1008,"parent":0,"template":"","meta":{"content-type":"","inline_featured_image":false,"footnotes":""},"blogcategories":[6,13],"class_list":["post-1007","blog","type-blog","status-publish","has-post-thumbnail","hentry","blogcategories-ecommerce-tips","blogcategories-shipping"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.5 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Is Free Shipping Really Free? Truths Behind Free Shipping<\/title>\n<meta name=\"description\" content=\"Online retailers must find the right pricing strategy and decide whether they will offer the illusion of free shipping to customers.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shipbob.com\/uk\/blog\/theres-no-thing-free-shipping-right-ecommerce-pricing-strategy\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"There\u2019s No Such Thing as Free Shipping: How to Choose the Right Shipping Pricing Strategy\" \/>\n<meta property=\"og:description\" content=\"Online retailers must find the right pricing strategy and decide whether they will offer the illusion of free shipping to customers.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.shipbob.com\/uk\/blog\/theres-no-thing-free-shipping-right-ecommerce-pricing-strategy\/\" \/>\n<meta property=\"og:site_name\" content=\"ShipBob UK\" \/>\n<meta property=\"article:modified_time\" content=\"2025-10-08T21:22:10+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.shipbob.com\/uk\/wp-content\/uploads\/sites\/32\/2022\/07\/iStock-583854602.jpg?w=1280\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"1280\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.shipbob.com\\\/uk\\\/blog\\\/theres-no-thing-free-shipping-right-ecommerce-pricing-strategy\\\/\",\"url\":\"https:\\\/\\\/www.shipbob.com\\\/uk\\\/blog\\\/theres-no-thing-free-shipping-right-ecommerce-pricing-strategy\\\/\",\"name\":\"Is Free Shipping Really Free? 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