Returns & Refund Profitability Calculator

How the returns & refund profitability calculator works

Expected returned orders = original orders × return percentage. Fractional counts represent an expected batch scenario. Original collections, product cost, outbound fulfillment and payment fees establish the no-return contribution. Average paid amount is also the fee base; include or exclude customer-paid shipping consistently.

The return scenario subtracts refunds and additional handling, then adds the entered recovery of product cost and refunded processing fees attributable to returned orders. Original outbound fulfillment remains incurred. Each batch cost component rounds half-up to cents; this average-order model does not reproduce per-transaction rounding or processor-specific refund rules.

Inventory recovery is economic cost recovered into usable stock, not immediate cash received or proof that the item will sell. The average refund cannot exceed the original average paid amount. Taxes, overhead, replacement shipments and unentered charges are excluded. Enter recovery and fee-refund terms explicitly rather than assuming a universal policy; losses remain signed.

Worked example

One hundred orders at 100 each have product cost 40, outbound cost 10 and processing fees of 3% plus 0.30 per order. No-return contribution is 4,670. If 10% return, refunds total 1,000 and handling costs 80. Recovering 80% of the 40 product cost on those ten returns adds 320; no fee refund is assumed. Contribution becomes 3,910, down 760. At a 20% return rate it becomes 3,150.

Sources and assumptions

The source material explains the underlying calculation or pricing structure. Entered prices, costs, schedules and scenario choices are your assumptions; this tool does not obtain supplier quotes or predict actual results.

• Shopify: profit-report and product-cost definitions