Return label cost per order.

The true cost of a return

When a buyer returns an order you refund the sale, but the refund is not the whole cost. The outbound shipping label you paid is gone. Major processors keep the original processing fee when you refund: Stripe's pricing page states that the processing fees from the original transaction are not returned, and PayPal's fee page says the same for the fees paid to receive the payment. You may pay for the return label, spend time restocking, and write off goods that cannot be resold. This calculator adds those lines for one returned order, spreads them across all orders at your return rate, and compares them with the profit on an order that stays sold.

Formulas

Cost per returned order = return label you pay + outbound shipping + unreturned processing fee + handling + (unsellable share x item cost). Profit on a kept order = price + shipping charged - item cost - outbound shipping - processing fee. Expected profit per order = (1 - return rate) x kept profit - return rate x cost per return. The break-even return rate solves that for zero: kept profit / (kept profit + cost per return). Every figure comes from numbers you enter, so there is no carrier rate table to go stale.

Worked example

A $40 item costing $15, shipped for $6, with an $8 return label you pay, 2.9% + $0.30 processing, $1 handling and 80% of returns resellable. Processing fee lost: $1.46. Write-off: $3. One return costs $8 + $6 + $1.46 + $1 + $3 = $19.46. A kept order earns $17.54. At a 10% return rate expected profit is $13.84 per order, and the product breaks even at a 47.41% return rate. To cover returns at 10%, each kept order needs about $2.16 more margin.

• Charging the buyer for the label moves its cost to them but may lower conversion; the tool shows the cost side only.
• Refunded shipping and restocking fees you charge buyers are not modelled.
• Returns for damaged or wrong items may be covered by marketplace policies; enter the cost you actually bear.

Last checked against the sources 2026-10-19. Sources: Stripe Pricing & Fees (processing fees from the original transaction are not returned on refunds); PayPal Merchant Fees (US) (receiving fees are not returned on refunds).

FAQ

How much does a return really cost?

The return label if you pay it, the outbound shipping you already spent, the processing fee you do not get back, handling time, and any goods you cannot resell. The calculator totals them for one return.

Do payment processors refund their fees when I refund a customer?

Generally no: Stripe says the original processing fees are not returned on refunds, and PayPal says the fees you paid to receive the payment are not returned.

What is a break-even return rate?

It is the return rate at which returns erase all profit from kept orders: kept-order profit / (kept-order profit + cost per return).

Should I offer free returns?

Compare the return cost per order shown here with the extra conversion you expect. If free returns raise sales by less than the added cost per order, charging for the label may be better.

How do I include unsellable returns?

Set the resellable percentage. Anything that cannot be resold is written off at your item cost.

Does this include marketplace return fees?

Not automatically. Enter marketplace return or restocking charges in the handling field if they apply to you.