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What do returns really cost per order?

A return costs far more than the return label. The revenue is refunded, but shipping, fees, advertising and handling are lost. For a €39.99 product, 10 % returns reduce the contribution from €7.61 to €4.95 per order – €2.66 on every order you sell, not only on the returned ones.

Enter your own return rate and cost per return – the calculator shows contribution and margin as expected values.

Open the profit calculator

What you lose on a returned order

When a customer sends an order back, you refund the price and – if the product is undamaged – put it back into stock. Everything else is gone:

  • Outbound shipping and packaging.
  • Marketplace and payment fees (often only partly refunded).
  • The advertising that brought the order.
  • The return label, handling, checking and repacking.
  • Write-offs for goods that cannot be sold as new.

Calculating with expected values

Because you do not know in advance which order will come back, calculate per order with the return rate: revenue and product cost are only earned on the orders that stay, all other costs occur on every order. That is exactly how the profit calculator works.

Expected net revenuenet price × (1 − return rate)
Product costpurchase price × (1 − return rate)
Return costcost per return × return rate
Contributionexpected net revenue − all costs

Table: contribution by return rate

Same product: €39.99 incl. 19 % VAT, purchase price €12.00, shipping €4.50, 15 % marketplace fee, €3.00 ads, €5.00 per return.

Return rateContribution per orderMargin
0%€7.6122.6%
5%€6.2819.7%
10%€4.9516.4%
20%€2.298.5%
30%-€0.37-1.6%

January: the returns from Christmas

After Christmas many gifts come back, so January traditionally brings a lot of returns (OnlinehändlerNews, see sources). The University of St. Gallen sees the share of returns falling since 2022 – so the January peak may be smaller than you remember. How big it is in your shop, only your own numbers can tell.

What it can cost, with example values (not measured): if the return rate of your December orders is 20% instead of your usual 10%, the contribution falls from €4.95 to €2.29 per order. On 100 December orders that is €266.05 less than you planned.

What to check in January:

  • Your real return rate of the December orders – count the returns that arrive in January too.
  • Which products came back most often and why (size, damage, unwanted gift). Fix the product page or packaging of the top ones first.
  • Whether returned goods can be sold again as new. Enter write-offs in the cost per return.
  • If you extended your return period for Christmas: returns can come weeks later. Plan your cash and stock with that in mind.
  • Then enter the real rate in the calculator or rerun the shop check – your margin for the new year starts from that number.

Worked examples: 10 % returns on a €39.99 product

Costs as in the table above. How much of the contribution do the returns take?

Contribution without returns
€7.61
Contribution with 10 % returns
€4.95
Cost of returns per order sold
€2.66
Share of the contribution lost
35%
Margin with returns
16.4%

Every percentage point of returns costs about €0.27 per order here – reducing returns is often worth more than a small price increase.

Common mistakes and how to fix them

Only counting the return label

Why it matters: Shipping out, fees and advertising of the returned order are lost too – usually more than the label.

Fix: Enter the return rate and a cost per return that includes handling and write-offs.

Calculating the margin on the best case

Why it matters: A margin without returns is never reached if 10–20 % of orders come back.

Fix: Always calculate with the expected return rate per product or category.

One return rate for the whole shop

Why it matters: Fashion, shoes and electronics have very different return rates; an average hides the products that lose money.

Fix: Use the return rate per product group – the catalogue analysis accepts it per row.

Frequently asked questions

Is the product cost lost on a return?

Not if the product can be sold again – then it goes back into stock. Enter write-offs for damaged or unsellable goods in the cost per return.

Are marketplace fees refunded on returns?

It depends on the platform and is often only partly the case. Check your marketplace's fee rules and enter what you actually lose in the cost per return.

Should I count Christmas returns in my December margin?

Yes. A return belongs to the order it came from, even if it arrives in January. Otherwise December looks better than it was and January worse.

How can I lower the cost of returns?

Better product information (size tables, photos, honest descriptions), sturdy packaging and checking which products are returned most often. Each point of return rate you save raises the contribution of every order.

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Sources

Fees, rates and rules change. We check the official sources listed here regularly – the date shows our last check.