Return rate calculator
Your return rate is the share of orders customers send back: returns ÷ orders shipped × 100. Multiply the returns by your average order value for the revenue that comes back, and by your cost per return for what processing them costs. The share you can restock is the value you win back.
200returns a month
2,400 a year, from 2,000 orders a month.
| Measure | A month | A year |
|---|---|---|
| Returns | 200 | 2,400 |
| Order value returned | $12,000 | $144,000 |
| Cost to process them | $1,600 | $19,200 |
| Back on the shelf | $7,200 | $86,400 |
| Not resellable | $4,800 | $57,600 |
How the return numbers are worked out
Every output comes from five inputs, multiplied out for a month and then for twelve months. Here is the math with your numbers:
Returns: 2,000 orders × 10% = 200 a month
Order value returned: 200 × $60 = $12,000
Cost to process: 200 × $8 = $1,600
Back on the shelf: 200 × 60% × $60 = $7,200
The calculator treats each return as a whole order. If customers usually send back part of an order, enter the average value of a return instead of the order value.
The cost per return is the return label plus the warehouse work: receiving, inspecting, grading and repackaging the item. Refunds, lost margin and customer service time come on top. Return labels are billed on the greater of actual and dimensional weight, like any parcel; check your box sizes with the dimensional weight calculator.
The same store at other return rates
Each point of return rate moves all three columns in step. Use the table to see what a change in your rate is worth before you spend on fixing it.
| Return rate | Returns a year | Value returned a year | Processing cost a year |
|---|---|---|---|
| 5% | 1,200 | $72,000 | $9,600 |
| 10%Your rate | 2,400 | $144,000 | $19,200 |
| 15% | 3,600 | $216,000 | $28,800 |
| 20% | 4,800 | $288,000 | $38,400 |
| 25% | 6,000 | $360,000 | $48,000 |
| 30% | 7,200 | $432,000 | $57,600 |
Ways to bring the cost of returns down
Two levers move the numbers above: fewer returns, and more of them back on the shelf.
Find out why items come back
Record a return reason for every return and read it by SKU. Sizing, photos, descriptions and packaging that lets items arrive damaged each point at a different fix.
Grade returns quickly
A returned item can only sell again once it has been inspected and put back into available stock. The share you restock depends on how consistently returns are graded and put away.
Count restocked units in your next order
Units that go back on the shelf are stock on hand, so they push your next purchase order back. Work the timing out with the reorder point calculator.
Keep the return label small
A return ships like any parcel, so the box size you choose on the way out shapes the label cost on the way back. Right-size the box with the dimensional weight calculator.
Process returns where you ship
When the warehouse that ships your orders also receives the returns, restocked units go straight back into the same inventory. Returns processing is one of Fulfillment Hub USA’s services; ask for a quote with your return volume.
Common questions
How do you calculate the return rate?
Divide the orders returned in a period by the orders shipped in the same period and multiply by 100. 200 returns from 2,000 orders is a 10% return rate. You can also measure it by units or by revenue; pick one and use it every month so the trend is comparable.
Should exchanges count as returns?
Count them in the return rate, because the item still comes back and still has to be received, inspected and restocked. Track them apart from refunds, because with an exchange you keep the sale.
What goes into the cost of processing a return?
The return shipping label plus the warehouse work: receiving the parcel, inspecting and grading the item, repackaging it and putting it back into stock, or disposing of it. Refunds, lost margin and customer service time come on top.
Why does the share restocked matter so much?
Every return you can resell goes back into available inventory at its full value. The rest is written off, sold off cheaply or recycled. Raising the restocked share lowers what returns really cost you without changing the return rate.
Does Fulfillment Hub USA process returns?
Yes. Returns processing is one of our services, alongside ecommerce and B2B fulfillment, kitting, FBA/FBM prep, storage, and freight and shipping support. Our U.S. warehouses are in Dover DE, Miami FL, Houston TX, Los Angeles (Commerce) CA and South San Francisco CA, and onboarding typically takes 3 to 5 business days.
More shipping and inventory tools
Hand returns to the warehouse that ships your orders.
Tell us your order volume, return rate and products, and we’ll price returns processing alongside pick, pack and storage.