Free delivery and a price discount can produce the same customer saving but different results across orders. Compare the cost you absorb and the revenue you give up for the actual destination and basket.
The examples are hypothetical. Shipping rates, fees and tax treatment must come from your own applicable records.
Define the ordinary order
Suppose products total ₹1,000 and the customer normally pays ₹80 delivery. The courier cost is also ₹80 in this simplified example.
Assume the defined product-related variable costs are ₹600. Total revenue is ₹1,080, total stated cost is ₹680 and contribution is ₹400.
This separates delivery income and expense instead of treating the fee as extra profit.
Calculate free delivery
If you remove the ₹80 delivery charge while still paying the courier, revenue becomes ₹1,000 and stated cost remains ₹680.
Contribution becomes ₹320. The customer saves ₹80 and the business gives up ₹80 contribution under the model.
If the courier charge differs by destination, the result must be recalculated rather than assuming one universal subsidy.
Calculate a product discount
An ₹80 product discount with delivery still charged produces product revenue ₹920 plus ₹80 delivery, or ₹1,000 total.
With the same ₹680 cost, contribution is also ₹320 in this simplified case.
The offers are economically equal here because the assumptions match. Percentage fees or different eligible bases can change that equality.
Compare a percentage offer
A 10% product discount on the ₹1,000 basket gives up ₹100, more than the ₹80 delivery charge.
At a smaller or larger basket, that relationship changes. Do not generalise from one order value.
Use a table of representative baskets and delivery destinations before choosing the offer.
Include fee treatment correctly
If a payment charge depends on the final collected amount, calculate it on the applicable base. Do not assume product discounts and removed delivery fees always affect charges identically.
Use the provider's current terms and your accounting treatment.
Keep the simple example as an explanation, then add the real variables to the decision sheet.
Check the customer-facing meaning
Free delivery should not hide an added handling charge that defeats the stated promise. A product discount should clearly show what it applies to.
If the offer has a minimum value, maximum subsidy or location restriction, disclose it where the customer can understand it before checkout.
Do not use the phrase free merely because a cost has been renamed elsewhere.
Test expensive destinations
A flat free-delivery promise can be costly for remote or bulky orders. Model the legitimate high-cost cases you actually serve.
If exclusions are necessary, configure and explain them rather than relying on staff to renegotiate after acceptance.
A manual delivery quote may be more honest for unusual requests.
Keep the purpose clear
The offer might reduce a visible checkout objection, introduce a collection or reward a specific basket condition. That purpose does not guarantee improved conversion.
Observe actual orders and questions rather than assuming the more attractive phrase produces a better business result.
A free-delivery campaign can increase activity while reducing contribution if the mix shifts towards expensive fulfilment.
Test a higher courier cost
If the same hypothetical product order costs ₹110 to deliver while the usual customer charge stays ₹80, ordinary contribution in the example falls to ₹370. Removing the charge then leaves ₹290. The offer still gives up ₹80 of revenue, but the starting contribution is already lower. This is why a single central-city delivery example cannot establish the economics of every destination you serve.
Choose from complete order economics
Compare final customer payment, delivery expense, other variable costs and retained contribution for each option.
Check the storefront at the eligibility boundary and preserve the accepted offer in the order record.
The better promotion is not the one that sounds more generous in isolation. It is the one customers can understand and the business can fulfil under a tested cost model.
Examples are illustrative. Confirm current features, charges and suitability before making a business decision.
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