Cost per Return

Cost per return shows what each return really costs once shipping, labor, packaging, and lost value are added up, and it is usually higher than brands expect. It drives return policy, return fees, and whether to push exchanges or returnless refunds. Track it by SKU and by return reason. For example, $10,000 of total return costs across 500 returns is $20 per return. On a $40 item, that is half the sale price, so preventing a return is worth more than processing it faster.

Cost per return = (return shipping + handling labor + repackaging + refund processing + value loss) / returns processed

How do you calculate the cost of a return?

Add return shipping, labor to receive, inspect, and restock, packaging, payment processing costs on the refund, and the drop in resale value. Divide the total for a period by the number of returns processed.

What is the biggest part of cost per return?

It varies, but return shipping and lost value are often the largest pieces. Items that cannot be resold at full price can lose more value than the return shipping costs.

How can a brand lower cost per return?

Offer exchanges and store credit first, consolidate returns before they ship to the warehouse, and grade and restock items quickly so they keep their value. Fixing the top return reasons cuts the volume itself.

• Return RateShare of sales that customers send back
• Reverse LogisticsMoving goods from customers back to the brand
• Returnless RefundRefund without sending the item back
• Cost per OrderCPOTotal cost to fulfill and ship one order
• Return LabelLabel for sending a product back
• Returns ConsolidationShipping many returns back together