Seller economics / returns
Your margin after the return arrives.
A return rate is only useful when it is translated into the expected dollars lost per order.
Updated September 1, 2026 · Illustrative education, not accounting or tax advice.
Return rate is not return loss
Return rate tells you how often an order is returned. Return loss estimates what each order costs on average after refunds, reverse shipping, restocking, damaged inventory, and other recovery gaps. Keep those concepts separate so the model remains auditable.
The order-level model
Expected return loss = return rate × loss per returned order
Use a conservative assumption when the cohort is small, then replace it with observed data as volume grows.
Run the scenario
Use the ecommerce profit calculator to compare a base case with a higher return allowance. Pair the result with the product pricing calculator if the required price needs to absorb the loss.
Do not overstate the result
- This is an expected-cost model, not a refund ledger.
- Returns can affect inventory and cash timing beyond the per-order estimate.
- Use platform statements and accounting records for final reporting.