The short answer
If you raise your item price by exactly what you'd charge for shipping, offering free shipping doesn't cost you anything in fees. Etsy's transaction and processing fees, and Shopify's card fees, are charged on the full amount the buyer pays, so $30 plus $6 shipping and $36 with free shipping produce the same fees and the same profit.
What changes is how buyers react to your price, and that's what the decision should be based on.
Same order, two ways
| On Etsy (US) | Charge shipping | Free shipping |
|---|---|---|
| Item price | $30.00 | $36.00 |
| Shipping charged | $6.00 | $0.00 |
| Buyer pays | $36.00 | $36.00 |
| Etsy fees | $3.87 | $3.87 |
Your profit is identical. The one way free shipping loses money is if you forget to add the label cost to the price, or if your average label costs more than you planned for.
Why free shipping can sell more
- No surprise at checkout. Unexpected costs added at the last step are one of the most common reasons online shoppers abandon a purchase. A price that already includes shipping avoids that moment.
- Search and filters. Buyers can filter for free shipping on many marketplaces, and Etsy has said it may favor listings with free shipping to US buyers in US search results. Check Etsy's current shipping settings for the latest details.
- Simpler comparison. A single price is easier to compare with a competitor's than a price plus shipping.
When charging for shipping makes more sense
- Heavy or bulky items, where shipping costs vary a lot by distance. A flat price would overcharge nearby buyers or lose money on faraway ones.
- Buyers who order several items. If each item includes shipping, a buyer of three items pays for three labels you never buy. Charging shipping per order, or offering free shipping above a threshold, avoids that.
- International orders. Postage abroad is often several times the domestic rate. Many sellers offer free domestic shipping and charge for international.
Find your real average label cost
Look at your last 20 to 30 labels and take the average, not the cheapest one. Include any extra you pay for tracking or signatures. If you sell items of very different weights, work out an average for each size group and price each group separately.
Try a free shipping threshold
A middle path is free shipping on orders above a set amount, such as $35. Buyers just under the line often add a second item to qualify, which raises your average order and spreads one label across more products. Set the threshold a little above your current average order value.
Free shipping on cheap items
Free shipping is hardest on low-priced products. Adding a $5 label to an $8 item turns it into a $13 item, and that can look expensive next to similar products. Two approaches work better here: sell in sets or bundles so one label covers several items, or ship small, light items in a flat mailer with a cheaper postage option if your carrier offers one for items of that size.
Whatever you choose, check the result in the calculator. Set shipping charged to 0, add the full label cost to the price and make sure the margin still clears your target.
How to test it
Change one thing at a time and give it about a month. Compare your conversion rate (orders divided by visits) and your average order value before and after, using Etsy Stats or Shopify Analytics. If more people buy and your profit per order holds up, keep the change.
To price for free shipping, set Shipping charged to 0, add your label cost to the item price and check your margin.
Open the profit calculator