This full-return example assumes no customer-paid shipping. If you charge shipping or retain any shipping payment on a return, reconcile that separately before treating this as your full order result.
An order can disappear from revenue while its costs stay behind. Refund the customer and you may still have paid to acquire, process, pack and ship that order. Getting the item back does not automatically undo those costs.
The free ecommerce return cost calculator compares a kept order with a fully returned order. It then weights those two outcomes by the full-return rate you enter. It is a scenario, not a prediction of future returns.
Start with the kind of return you mean
A physical return, a refund, an order cancellation and a sales-report reversal are related but different events. A customer can receive a refund without sending an item back. An order edit can reduce recorded sales without any physical return.
Shopify's sales reporting documentation makes that distinction explicit. Its broader sales reversals should not silently be used as a physical-return rate.
Our scenario covers fully refunded product orders with one cost pattern. For mixed baskets, partial refunds, exchanges and multiple items, use a matched cohort with the actual refunded value and recovered product costs in the order contribution calculator.
Work out the kept-order result first
Use this worked example, not an industry benchmark:
| Input per original order | Example |
|---|---|
| Product selling price | $60 |
| Product cost | $24 |
| Outbound shipping and packing | $6 |
| Original percentage fee | 3% |
| Original fixed fee | $0.30 |
| Advertising cost | $10 |
The original selling fee is $2.10. A kept order leaves $60 − $24 − $6 − $2.10 − $10 = $17.90 of contribution after those costs.
This does not include tax, overhead, owner pay or other unentered costs. Calling it net profit would overstate what the calculation establishes.
Now calculate the fully returned outcome
Suppose the customer receives all $60 of product revenue back. You recover 80% of the original $24 product cost into usable stock, pay $5 return postage and spend another $2 handling the return. None of the original fee is refunded in this example.
The unrecovered product cost is $4.80. The returned order leaves:
−$4.80 unrecovered cost − $6 outbound cost − $2.10 original fee − $5 return postage − $2 handling − $10 advertising = −$29.90.
The difference between a kept and fully returned order is $17.90 − (−$29.90) = $47.80 of contribution. That is the contribution lost relative to the kept outcome, not an additional cash invoice for $47.80.
Why “the product is back in stock” is not enough
Recovering product cost changes the economic loss, but it is not a second sale. An item that originally cost $24 does not generate $24 cash merely by returning to the shelf.
Use a realistic recoverable cost value. Damage, missing packaging, inspection, refurbishment and resale restrictions can lower it. A recoverable item can also take time to sell again.
Keep that assumption separate from extra handling costs. Do not subtract the full product cost as a write-off and then subtract the same write-off again in the handling field.
Check which original fees remain
Stripe's refund-fee explanation describes retained original processing fees and notes that fee schedules affect refund treatment. Other processors and negotiated contracts can differ.
The tool lets you enter the percentage of original fees refunded to you. Zero and 100% are different assumptions, not moral judgments about a provider. Use the schedule and settlement records that apply to your account.
A provider's public headline rate is also not always your effective cost. Cross-border, currency, marketplace and other fees can matter. The model uses your entered costs instead of guessing those charges.
How a return rate changes the scenario
At a 10% full-return rate in the example, the weighted contribution per original order is:
90% × $17.90 + 10% × (−$29.90) = $13.12.
For 100 original orders with the same assumptions, that is $1,312. It is not a measurement of 100 real orders or a promise that your next cohort behaves that way.
The cost break-even rate is $17.90 ÷ $47.80, about 37.4477%. The tool reports a conservative two-decimal threshold of 37.44%. This is where the entered cost scenario reaches zero contribution; it is not a target return rate to aim for.
Match refunds to their original orders
Returns processed this month may belong to orders acquired last month. A sudden increase in refunds can reflect timing, product mix or a reporting change, rather than a sudden change in customer behavior.
Use cohorts old enough for their return window to develop. Keep product, country and fulfillment differences visible instead of averaging incompatible orders together. Compare both the rate and the costs per return.
Shopify's return management guidance can help you understand the platform workflow. A workflow guide does not replace the financial reconciliation above.
Test the costs you can actually change
Try the return cost scenarios with your own retained fees, recovery rate and return postage. Then examine whether the biggest cost comes from acquisition, fulfillment, recovery or handling.
If you are considering a promotion, connect this check with the free shipping threshold and inventory markdown test. More orders are useful only when you understand what each outcome leaves. For a more detailed cohort question, ask for a free manual review.