True cost of product returns.

Product returns cost more than the refund amount. Each return triggers: revenue refund, reverse logistics shipping, inspection and processing labour, restocking loss (damaged or unsaleable items), and customer service time. True cost of a return is often 1.5-2.5x the refund value once all costs are counted.

5,000 orders × 10% return rate = 500 returns. At 80 AOV: 40,000 refunded. Processing 5/return: 2,500. 20% restocking loss: 8,000. Total monthly return cost 50,500, or 10.10 per return. Annual: 606,000. That's 10% of gross revenue eaten by returns.

Return rate varies massively by category: apparel 20-30% (sizing issues), electronics 5-15%, home goods 10-20%, beauty 2-5%. Reducing return rate by even 2-3 percentage points can be worth 100k+ annually for mid-sized ecommerce. Best levers: better product photos, size guides with actual measurements, customer reviews with fit details, virtual try-on.

Run it with sensible defaults

Using monthly orders of 5,000, return rate of 10%, avg order value of 80, return processing cost of 5, the calculation works out to 50,500.00. Nudge the inputs toward your own situation and the output recalculates instantly. The defaults are meant as a starting point, not a recommendation.

The levers in this calculation

The inputs — Monthly Orders, Return Rate %, Avg Order Value, Return Processing Cost, and Restocking Loss % — do not pull with equal force. Frequency and unit price pull the total in different directions. The biggest surprise for most people is how small recurring amounts compound into large annual figures — that's where this calculation earns its keep.

How the math works

Returns = orders × return rate. Cost = refund + processing + restocking loss. Total = returns × per-return cost. The working is transparent — you can verify every step yourself in the formula section below. No black box, no opaque "proprietary model".

What the score tells you

Headline financial numbers — income, savings, debt — each tell part of the story. This calculation stitches several together into a single read you can track over time. The value is in the direction, not the absolute number.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.