Ecommerce

Return Rate Profit Calculator

Enter price, cost, fees and return rate to see expected profit accounting for returns.

Expected profit / order
Profit if kept—
Contribution × (1−r)—
Cost at risk (cost×r)—
Simplified model — not full reverse-logistics accounting.

How do returns hit profit?

Returns quietly erase margin: you may keep fees or shipping losses on coming-back stock, and you still paid for the unit that did not stay sold. A simplified expected-profit model takes contribution if kept (price − cost − fees), multiplies by the keep rate (1 − return rate), then subtracts cost × return rate as a blunt write-off for returned goods. It is not a full reverse-logistics ledger — refund payment fees, restocking and salvage value are omitted unless you fold them into fees or cost. Use it to stress-test thin categories before ads spend. Pair with Shopify profit or product profit for the kept-order baseline.

Worked example

£40 price, £12 cost, £5 fees → £23 if kept. At 15% returns: expected ≈ 23×0.85 − 12×0.15 ≈ 17.75.

Limits and assumptions

Assumes returned units contribute zero resale value and that fees are not refunded. Adjust inputs if your channel refunds payment fees or you resell returns.

Frequently asked questions

Is return rate by units or revenue?

Enter the fraction of orders (or units) you expect to come back — stay consistent with how you measure.

What if I resell returned stock?

Lower the effective cost-at-risk (or cut the return rate) to reflect salvage; this simple model otherwise assumes a total loss of cost.

Should ad spend sit in fees?

If ads are paid per order attempt, yes. Attribution windows make this approximate.

Why can expected profit go negative?

High returns on low-margin goods can make the average order unprofitable even when kept orders look fine.

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