The short answer
A free-shipping threshold can encourage a larger basket, but the extra revenue must cover additional product costs and the shipping subsidy. AOV and ROAS may rise without increasing the contribution available to the business.
Compare the entire order
Illustrative baseline: products sell for $70, the customer pays $5 shipping, product cost is $35, carrier cost is $8, and other variable fees are $4. Revenue including shipping is $75. Contribution before ads is $75 − $35 − $8 − $4 = $28.
Illustrative threshold basket: products sell for $90 with no shipping charge. Product cost is $47, carrier cost remains $8, and other fees rise to $5. Contribution before ads is $90 − $47 − $8 − $5 = $30. The basket adds $20 in product revenue but only $2 in contribution.
Connect the comparison to advertising
At an assumed unchanged $20 CPA, the baseline leaves $28 − $20 = $8 after ads and the threshold basket leaves $30 − $20 = $10. On a revenue basis including shipping collections, ROAS moves from $75 ÷ $20 = 3.75× to $90 ÷ $20 = 4.5×. The absolute contribution improvement is much smaller than the revenue-ratio change suggests.
Test the assumptions that could reverse the result
If the new basket’s CPA rises to $23, it leaves $30 − $23 = $7, below the baseline’s $8. Heavier parcels or extra packing can also consume the difference. Use actual shipping zones and basket weights rather than assuming carrier cost stays constant.
Watch shoppers who would have qualified anyway
Some customers may already have intended to buy above the threshold. Giving them free shipping can reduce contribution without causing a larger basket. A before-and-after average cannot fully distinguish that effect from changes in traffic or promotions. A suitable controlled comparison can provide better evidence.
Measure the outcome you need
Record basket revenue, shipping collections, fulfilled costs, conversion rate, CPA, and returns. Use a consistent revenue definition in both the ROAS report and its threshold. Judge the offer on total contribution and the intended customer outcome, not on whether the average basket crossed a visually appealing target.
Evaluate the shipping subsidy
- Gather: Compare basket revenue, shipping collected, product cost, carrier charge, fees and CPA.
- Produce: Measure contribution from all affected orders, including shoppers who already qualified.
Decision boundary: Higher AOV does not prove that the shipping subsidy pays for itself.
Next reading
Examples are illustrative, not client results or benchmarks. The calculations use the inputs shown; real-world decisions depend on your records and assumptions. Report a correction.