Return Rate Calculator
What are returns actually costing me?
Your numbers
Result
Return rate
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How this is calculated
Returns cost more than the refund. They reverse the sale, add handling cost, and in many cases destroy the item's resale value — while the acquisition cost has already been spent and cannot be recovered.
- Return rate = returned orders ÷ total orders
- Loss per return = unrecovered item value + handling cost + acquisition cost
- Unrecovered item value = order value × (1 − share of value recovered)
- Total cost of returns = returned orders × loss per return
- Cost per order shipped = total cost of returns ÷ total orders
What to make of the number
The acquisition cost embedded in a return is the part most stores never count. On a $58 order with a $19 CPA, a returned sale costs roughly $35 once handling and write-off are included — meaning a 9% return rate consumes around 12% of total contribution, not the 9% it appears to.
Frequently asked questions
Why do returns cost more than the refund amount?
Because the refund is only part of it. You also absorb return shipping, inspection and repackaging, any loss of value if the item cannot be resold as new, and the acquisition cost you spent to win the customer in the first place.
What is a normal return rate?
Highly category dependent. Apparel and footwear often run 15–30% or more; home goods and electronics typically run much lower. Benchmark against your own trend rather than an industry average.
How do I reduce returns?
Set accurate expectations on the product page: detailed sizing, true-to-life photography, clear dimensions and honest descriptions. Analysing return reasons by SKU is usually the fastest route, because a small number of products often cause a disproportionate share.
Should I charge for return shipping?
It reduces return volume but also reduces conversion, so it needs testing rather than assuming. Free returns frequently pay for themselves through higher conversion — the right answer depends on your margin and return rate together.
How should returns affect my ad bidding?
Include them. Your maximum viable CPA should be reduced by the expected cost of returns per order, otherwise you will be bidding as if every sale is final when a known share of them are not.