Minimum order value

What a minimum order value does

A minimum order value is the amount a basket must reach before an order is accepted. It is usually set for two reasons: because small orders contribute nothing after shipping, packaging and payment fees, and because customers are encouraged to fill the basket.

Both reasons are valid but differ in strength. The cost calculation is reliable, since it rests on your own figures. The expectation that customers will add more is not, because some customers postpone the purchase or buy elsewhere.

How the level is determined

The solid basis is a contribution margin calculation. It determines the order value at which the order yields a positive contribution after all variable costs. Those include cost of goods, shipping, packaging, payment fees and the return share. The resulting figure is the lower bound, not the target.

Beyond that, the distribution of baskets decides. If many orders sit just below the planned threshold, the barrier hits exactly the group that carried the shop so far. It therefore makes sense to place the threshold in a gap in the distribution, not in the middle of a cluster.

What the law requires

A minimum order value must be clearly recognisable before the order is completed, not only at the last step of the checkout. If it is revealed there and the customer abandons, the frustration is justified and the abandonment rate rises. A notice in the cart is better, combined with showing how much is still missing to reach the threshold.

Alternatives and side effects

• Minimum quantity instead of value: Only works for assortments where buying several units is normal.
• Free shipping above an amount: The gentler variant, because the customer keeps a choice instead of being shut out.
• Surcharge for small orders: Allows small orders and covers the cost, but feels less friendly than a hard limit.
• Bundle offers: Reach the goal through value rather than through a barrier.

The side effects are measurable and should be measured. Two figures suffice: the average basket before and after introduction, and the share of abandoned baskets that failed to reach the threshold. If the average basket rises only slightly while many baskets stall below the threshold, the barrier was too high. For customers with genuinely small needs, such as buyers of spare parts or repeat buyers of single consumables, the way to a competitor becomes permanent, and those customers rarely return.