'Free shipping over ₹499' is the most common shipping policy in Indian D2C — and most sellers picked ₹499 because it sounded right, not because the math worked. The threshold is one of the few genuinely optimisable numbers in e-commerce — here's the actual math.
The formula in one line
Free shipping pays for itself when the margin on the extra cart value exceeds the freight. At 30% product margin and ₹70 freight: the threshold needs to lift the order by ~₹235 to break even. If 'free above ₹499' pushes ₹350 carts to ₹499, you're up ~₹45 per converted order. If it doesn't, you're paying ₹70 for nothing.
The anchoring effect
The threshold should sit ~15–25% above your current AOV — high enough to pull the order up, low enough to be reachable. ₹499 when AOV is ₹380 pulls; ₹999 when AOV is ₹380 doesn't. Check your actual AOV first, then set the threshold.
Where it goes wrong
Free shipping on top of COD stacks the two worst costs — ₹70 freight + ₹45 COD fee + RTO exposure on an order you discounted to get. Consider 'free shipping on prepaid only' — a gentle COD→prepaid conversion nudge that also protects margin.
Zone-aware reality
₹499 free shipping is profitable on a regional lane and loss-making to Guwahati. If your order mix is tier-3 heavy, either price the threshold higher, or constrain free shipping to non-special zones — it's in the checkout logic, not the shipping tool.
Pakka Parcel automates exactly this — the pipeline from order to AWB without the manual steps.
See how →The playbook
Pull your real AOV
Last 90 days — the threshold sets relative to this.
Compute break-even lift
Freight ÷ margin% = the cart increase needed.
Set threshold at AOV + 20%
Close enough to pull carts up, high enough to matter.
Gate COD separately
Free shipping = prepaid; COD pays the COD fee visibly.
