Guardrail: Rate Pricing Sanity

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When to use

Run these checks when evaluating existing shipping rates or before creating/updating shipping rate configurations. All thresholds are relative to the store's Average Order Value (AOV).


Check 1: Excessive shipping cost

Threshold: Any rate amount > AOV x 0.15 (15%)

Why: Shipping costs above 15% of order value are a top reason for cart abandonment. Customers who see disproportionately high shipping fees frequently abandon their carts.

Detection:

  • For each shipping rate, compare amount against AOV × 0.15
  • If exceeded → flag:

"Shipping rate '{title}' charges ${amount}, which is {pct}% of your average order value (${AOV}). Shipping costs above 15% of order value are a top reason for cart abandonment."


Check 2: Per-item penalty (multiplyByQuantity)

Trigger: multiplyByQuantity: true on any shipping rate

Why: Per-item shipping charges penalize larger orders and discourage customers from adding more items to cart.

Detection:

  • Find all rates with multiplyByQuantity: true
  • Calculate the impact for a typical multi-item order:

"Your '{title}' rate charges per item (${amount} x quantity). A 5-item order costs ${amount x 5}. Switch to a flat rate or tiered pricing to encourage larger orders."


Check 3: Free shipping threshold too high

Threshold: Free shipping threshold > AOV x 2

Why: If the free shipping minimum is more than double the average order, very few customers will ever qualify. The threshold should be achievable — close enough to the AOV to encourage customers to add one more item.

Detection:

  • Compare free shipping threshold against AOV × 2
  • If exceeded → flag:

"Your free shipping threshold (${threshold}) is {X}x your average order (${AOV}). Most customers won't reach it. Lower to ${AOV x 1.2} to make it achievable and drive larger orders."


Check 4: Free shipping threshold too low

Threshold: Free shipping threshold < AOV x 0.8

Why: If the threshold is below the average order value, most customers already qualify for free shipping without adding anything to their cart. This provides no upsell incentive and may erode margins unnecessarily.

Detection:

  • Compare free shipping threshold against AOV × 0.8
  • If below → flag:

"Your free shipping threshold (${threshold}) is below your average order value (${AOV}). Most customers already qualify, so this threshold isn't driving larger orders. Consider raising it to ${AOV x 1.2} to encourage add-on purchases."


Check 5: Backup rate sticker shock

Threshold: backupRate.amount > effective AOV x 0.15

Why: Backup rates apply when the primary carrier can't fulfill (e.g., remote address, service outage). If the backup rate is dramatically higher than normal shipping, customers experience sticker shock at checkout.

Detection:

  • For each carrier's backupRate, compare amount against effective_aov × 0.15
  • If exceeded → flag:

"Backup rate of ${amount} is {pct}% of your average order value. When triggered, this will surprise customers with unexpectedly high shipping. Set the backup rate to 5-10% of average order value (${effective_aov x 0.05} - ${effective_aov x 0.10})."


Check 6: Hidden surcharges

Threshold: Total additionalCharges across all carriers > AOV x 0.10

Why: Carrier surcharges (fuel, residential delivery, handling fees) add up. If the total surcharge burden exceeds 10% of the order value, it may negate the perceived value of the base shipping rate.

Detection:

  • Sum all additionalCharges across active carriers
  • Compare total against AOV × 0.10
  • If exceeded → flag:

"Carrier surcharges add ${total} to shipping costs. Combined with base rates, total shipping cost may deter customers. Review each surcharge to determine if it's necessary."


Summary: Pricing sanity thresholds

CheckThresholdAction
Excessive rateRate > 15% of AOVFlag — cart abandonment risk
Per-item penaltymultiplyByQuantity: trueFlag — discourages larger orders
Free threshold too highThreshold > 2x AOVFlag — unreachable for most customers
Free threshold too lowThreshold < 0.8x AOVFlag — no upsell incentive, margin erosion
Backup rate shockBackup > 15% of AOVFlag — recommend 5-10% of AOV
Hidden surchargesTotal surcharges > 10% of AOVFlag — review necessity
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