What this calculator tells you
Refunds remove revenue after an order has already consumed product, fulfillment, and payment costs. Modeling the leak separately makes it easier to decide whether a return policy, sizing guide, or product change deserves attention.
When to use it
Use it after a sizing, quality, or shipping change, or when comparing the cost of a loyalty policy with the cost of preventable returns.
Start with your landed cost, real fee rates, and a pessimistic advertising cost. The result is more useful when the assumptions are honest.
Counting only the refunded item price ignores processing fees and the part of product cost that never returns to sellable inventory.
Frequently asked questions
What is the recovery rate?
It is the share of product cost recovered through resale, liquidation, or a supplier credit. Use zero when the returned item cannot be sold or recovered.
Does this include return shipping?
Not unless you add it to the refund fee field. Include your carrier or return-label cost there for a more conservative estimate.
Why add refunded revenue and unrecovered cost?
The result is a cash-impact model: revenue is reversed, fees may still be charged, and some product cost may not be recovered. It is not a replacement for accounting records.
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