Return rate calculator
Your return rate is the share of orders that come back. Each return costs more than the refund: shipping both ways, handling, and stock you can't sell again. Enter orders, returns and those costs, then drag the return rate to see the profit every point takes. Or paste returns by SKU to find the products that come back most.
Your return rate is the share of orders that come back. Each one costs more than the refund: shipping both ways, handling, and stock you can’t sell again. See what returns take from your profit.
- Return rate
15.0%
150 of 1,000 orders- Cost per returnShipping out + return label + handling + the product cost of returns you can't resell, averaged per return.
- $28.00on top of the refund
- Profit lost to returns
- $10,50025% of $42,000; 46.3% margin on kept sales
- 5 points fewer returns
- +$3,500gross profit per 1,000 orders
Showing the worked example: 150 of 1,000 $80 orders returned. Drag the chart or type your own.
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How to read your number
Return rate is the share of orders that come back. 150 returns from 1,000 orders is 15%. Each of those returns costs $28 beyond the refund: $8 of shipping out that's already spent, $9 to ship it back, $5 to process it and $6 for the one in five you can't resell. Together they cut gross profit from $42,000 to $31,500, and the margin on kept sales from 52.5% to 46.3%.
Why it matters
The refund is only part of a return. You've paid shipping twice, spent time checking and restocking it, and some of it goes in the bin. NRF and Happy Returns put US retail returns at 16.9% of sales, so for many stores returns are one of the largest costs after product and ads. Knowing the cost per return tells you what a fix is worth: better size guides, clearer photos, or a return fee.
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Formula
Return rate = orders returned ÷ orders shipped × 100
Cost per return = shipping to the customer + return shipping + handling + (share unsellable × product cost). Count returns against the orders they came from, by order month, since returns trail sales by a few weeks.
Other ways to calculate return rate
- By units
- Return rate = units returned ÷ units sold
- When orders hold several items and customers send back only some, as in apparel where shoppers order two sizes.
- By value
- Return rate = value refunded ÷ gross sales
- The way NRF and most finance teams report it, and the number to use for revenue forecasts.
- Margin left on kept sales
- Margin = (kept orders × (AOV − product cost) − all orders × shipping out − returns × cost per return excluding shipping out) ÷ kept revenue
- To see what returns do to profitability, not just to revenue.
- With a restocking fee
- Cost per return = shipping out + shipping back + handling + unsellable × cost − fee charged
- When you charge a return or restocking fee, or deduct return shipping from the refund.
How to calculate return rate: a worked example
A store ships 1,000 orders at $80 each, with $30 of product in each order and $8 of shipping it pays. 150 orders come back. It pays $9 for each return label and $5 to inspect and restock, and 20% of returns can't be resold.
- Return rate = 150 ÷ 1,000 = 15%
- Cost per return = $8 + $9 + $5 + 20% × $30 = $28; all returns = $4,200, or 5.25% of gross sales
- With no returns: 1,000 × ($80 − $30 − $8) = $42,000 of gross profit, a 52.5% margin
- With returns: 850 × $50 − $8,000 shipping out − 150 × $14 − 30 × $30 = $31,500
- Margin on the $68,000 kept = $31,500 ÷ $68,000 = 46.3%
Returns cost this store $10,500 of gross profit, a quarter of what it would have earned: $70 for every order that came back.
What's a good return rate?
It depends on the category. NRF and Happy Returns put returns across US retail at 16.9% of sales, but categories where fit and look are hard to judge on a screen, such as clothing and shoes, tend to see more. Compare against your own history and against stores in your category, not one overall number.
Read the reasons, not just the rate. Returns for wrong size, not as pictured or arrived damaged are fixable on the product page or in packing: size guides with real measurements, photos and video of the product on a person, and reviews that mention fit. Watch them by product with heatmaps on the product page and the reasons customers give.
| Return rate | Gross profit per 1,000 orders | Margin on kept sales |
|---|---|---|
| 0% | $42,000 | 52.5% |
| 5% | $38,500 | 50.7% |
| 10% | $35,000 | 48.6% |
| 15% | $31,500 | 46.3% |
| 20% | $28,000 | 43.8% |
| 30% | $21,000 | 37.5% |
| 40% | $14,000 | 29.2% |
Questions about return rate
- How do you calculate return rate?
- Divide the orders returned by the orders shipped and multiply by 100. 150 returns from 1,000 orders is a 15% return rate. Match returns to the period the orders shipped in, since returns arrive weeks after the sale.
- What is the average return rate?
- The average US retail return rate is about 16.9% of sales, across stores and online, by NRF and Happy Returns' estimate. Rates vary widely by category, so compare with your own history and with stores that sell what you sell.
- How much does a return cost a store?
- Add the shipping you paid to send it, the return label, handling and inspection, and the product cost of anything you can't resell. In the worked example that's $28 per return, on top of losing the sale's gross profit.
- How can I reduce my return rate?
- Fix the reasons shoppers give. Size guides with real measurements, photos on a person, clear materials and colors, and reviews that mention fit cut wrong-size and not-as-pictured returns. Track returns by product to find the few causing most of them.
- How do I find which products have the highest return rate?
- Divide units returned by units sold for each SKU over the same period, then sort. Return costs usually cluster in a few products, often one size or color. Paste units sold and returned by SKU into the calculator's SKU view to rank them and download the list.
- Should I offer free returns?
- Free returns can lift conversion, since NRF found 76% of consumers count them as a key factor in where they shop. Price them in: use this calculator to see what your return rate costs, and test free against paid returns before rolling either out.
Sources
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