MLMaxim Lazovsky Head of Operations
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Gostockup project · 2026 · model ready, test running

Free-shipping economics

How the question “what if shipping were free?” turned into a model on a year of orders, a calculator and a decision we can test.

We sell Eastern European food nationwide, and one package often carries two different worlds. Perishables: dairy, frozen, deli. And everything else: dry goods, sweets, drinks.

The idea was mine: make shipping free on non-perishables above a certain order total, and keep perishables paid, since they need an insulated box and coolant. Before taking it to the CEO, I wanted to answer a simple question: would we lose money on this or make money.

How I counted

A full year of orders

A quick estimate on part of the orders could show almost anything. So I took the whole year, worked out growth, and only then drew a conclusion.

What went into the model

Orders
All 12,123 paid orders over the year: the share of perishables and the rest in each, weight and destination state.
Margin
Separately by product category.
Carts
1,941 abandoned carts, to see how many people leave over the shipping cost.
Growth
Over two years. I left out the store’s launch period so it wouldn’t skew the picture.

Carriers

Mistake
The first numbers used one carrier’s rates, and costs came out too high.
Turn
When I added two more carriers, the difference in shipping cost was almost twofold.
Result
The model switches between carriers and recalculates cost for the order’s weight and shipping zone.

The logic

What free shipping buys, and what it costs

The model lays out the balance step by step and shows the order growth at which the store breaks even.

What it brings

  1. New orders from people the shipping price used to stop
  2. Top-up to the threshold customers add to the cart to avoid paying
  3. Service fee a small one, from those below the threshold

What it costs

  1. Shipping the store now pays for it
  2. Lost revenue what customers used to pay for shipping

Rules

Business decisions inside the model

Only parameters agreed with the CEO went into the final figures. I kept extra ideas separate, as proposals, so they wouldn’t inflate the result.

Separate boxes

Perishables and regular items ship separately. The store covers shipping on regular items.

Service fee

Customers below the threshold pay a small fee.

Limit on heavy items

Heavy, glass and bulky products have a quantity limit per order.

Kept apart

Local delivery and the ad budget are counted separately and don’t mix into the model.

Verdict

Three scenarios, six thresholds

I ran the model in three scenarios: negative, neutral and positive.

  • A low threshold loses money in every scenario: cheap orders don’t cover shipping.
  • A mid threshold with the right carrier comes out positive. A very small rise in orders is enough to pay off.
  • A high threshold works as a nudge toward a bigger cart.
  • The main risk is service fees. Without them the economics get noticeably weaker.

I took this to the CEO, and he approved it. We decided not to rush: a quarter to prepare and a start with a short test. The threshold is now being tested with a group of customers.

Calculator

A model you can play with

I turned the model into an interactive page in two languages, built with tools. On it you can:

  • change the threshold, margin, growth and customer behavior;
  • pick a carrier;
  • see results over a horizon from three weeks to a year;
  • see charts by state, zone and threshold;
  • open the methodology: which data was used and why.

Before the final version I went back over every assumption in the model.

Along the way

What grew out of this model

While working on shipping, a few problems came up that needed their own tools.

Subscription

A threshold for subscribers

A plain “free for subscribers” broke the economics, so subscribers got their own, softer threshold.

Cold chain

Coolant calculator

How much dry ice and gel to pack by season, wall thickness and days in transit, with an hour-by-hour simulation of the temperature inside.

Warehouse

Limited-quantity list

Heavy, glass and bulky products that carry a quantity limit.

Discounts

Tiered discount formula

So loyalty members are guaranteed to get the discount they were promised, with no rounding losses.

What I took from it. The costliest mistake in the model is the wrong rate card. One carrier is almost twice as expensive as another, and that flips the whole conclusion. So before arguing about the threshold, check whose rates the math is using.

The full Gostockup case

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