How to Pick Spend Tier Thresholds From Your Own Order Data

Spend tiers, such as 10% off over $100 and 15% off over $200, can raise order values, but only when the thresholds are in the right place. Pick them by gut feel and you either discount orders that would have happened anyway or set goals nobody reaches. This guide shows how to set thresholds from your own order data and check that each tier still makes money.

Start with how Shopify measures your average order value#

Most advice says to set the first threshold a little above your average order value. Before you do, know what that number means in your admin. Shopify bases average order value on an order's gross sales minus discounts, excluding adjustments made after the order was created. Shipping and taxes are not part of it.

That matters because Shopify's spend-based minimums also count product prices, not shipping or tax. Its help page on free shipping discounts notes that the minimum purchase amount counts product prices and not taxes. Compare like with like: product value in, product value out.

Look at the spread of orders, not only the average#

An average hides the shape of your orders. A store with an average of $70 might have most orders near $70, or a pile of $30 orders and a smaller number of $150 orders. The right thresholds are different for each.

Export the last 90 days of orders from Orders in your Shopify admin and look at the subtotal of each order. Group them into bands of $10 or $25, depending on your prices, and count the orders in each band. A simple spreadsheet chart is enough.

Look for three things:

1. The main cluster: the band where most orders land.
2. The shoulder: the bands just above the cluster, where a smaller but real share of orders already reach.
3. The long tail: the few large orders. They tell you a top tier is reachable, not where to set it.

Put the first tier just above where many orders already land#

The first threshold should be reachable by adding one more item to a typical order. If it is below the main cluster, you are discounting orders you already get. If it needs three more items, few people will try.

For example, say your main cluster is $50 to $70 and your most popular add-on costs $15 to $20. A first tier at $80 asks the typical customer for one more item. A second tier at $120 rewards the shoulder, customers who already spend more, and gives them a reason to add another product.

Two tiers is plenty for most stores. A third tier makes sense only when your long tail is large enough that customers regularly reach it.

Size each discount against your margin#

A spend tier discounts the whole order, so check what each tier costs on an order that just reaches it.

For example, say your average gross margin on products is 55%:

Compare that to the typical order without a discount. If a $65 order earns $35.75 in margin, a customer who moves up to $80 with the 10% tier earns you $36.00: roughly the same margin for a bigger basket, more units moved and a customer who bought more of your range. The second tier earns more in total despite the bigger percentage.

Run the same table with your own margin. If a tier leaves less margin than the order it replaces, lower the discount or raise the threshold.

Line your tiers up with your free shipping threshold#

Shipping costs are a common reason people leave. Baymard Institute puts the average documented cart abandonment rate at 70.22% across 50 studies, and in its survey of US shoppers who abandoned for reasons other than just browsing, 40% said extra costs such as shipping, tax and fees were too high.

If you already offer free shipping over a threshold, use it. Two common patterns:

• Share the first threshold. Free shipping and 10% off both start at $80. One goal is easier to explain than two.
• Stack them. Free shipping at $60 and 10% off at $100. Each step gives the customer a new reason to add something.

Shopify's free shipping discounts can require a minimum purchase amount, apply to some countries only and exclude shipping rates over a set amount, which keeps expensive express rates out of the offer. Check how your free shipping discount combines with your spend tiers, so a customer gets both when you intend them to.

Show progress in the cart#

A threshold customers do not know about cannot change what they do. Tell them how close they are, in the cart, where they decide whether to add one more thing.

A message such as "Spend $14 more for 10% off" works better than a banner listing the rules, because it turns the threshold into a specific, small next step. If you use spend tiers in diex, the spend tiers progress block shows the tier reached, the amount left to the next one and a milestone bar, and updates as the cart changes. The spend tiers guide covers the setup.

Common mistakes to avoid#

• Setting thresholds from the average alone. An average of $70 with most orders at $30 calls for very different tiers than one with most orders at $70.
• Discounting the whole order when only some products carry margin. If some categories are thin, scope the tiers to the products that can afford it instead of the whole order.
• Too many tiers. Four thresholds are hard to remember and harder to show in a small cart drawer. Two or three is easier to act on.
• Forgetting other currencies. Thresholds are amounts in your shop currency. If you sell in several currencies, check how the offer reads to customers who see prices in theirs.

Review after a few weeks#

Thresholds are a hypothesis. After three or four weeks, export the orders again and compare:

1. Did the share of orders just above each threshold grow?
2. Did the share just below it shrink? That is the sign customers are adding items to reach it.
3. Did margin per order hold up once discounts are counted?

If orders pile up exactly at the threshold and margin fell, the discount may be too generous. If nothing moved, the threshold may be too far away, or customers may not see it.

Next steps this week#

• Export 90 days of orders and chart order subtotals in bands.
• Mark your main cluster, shoulder and long tail.
• Set a first tier one typical add-on above the cluster, and a second for the shoulder.
• Work out margin at each tier with your own numbers.
• Decide how the tiers relate to your free shipping threshold, and show progress in the cart.