Profit erased by refunds. The Refund Impact Calculator takes revenue for the period, refunds issued, gross margin, handling cost per refund, number of refunds and returns gross profit erased by refunds plus refund rate, revenue after refunds. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Online and retail margins are decided by the costs that are easy to forget: fees, shipping, returns, storage and advertising. Fill in every line, even with an estimate, before deciding what to sell and at what price. Use the worked example below to check the maths against your own figures.
How the Refund Impact Calculator works
A refund removes the profit on the sale and adds handling cost, so a 6% refund rate can erase a fifth of gross profit at a 35% margin.
Worked example
With the example values (revenue for the period of $100,000, refunds issued of $6,000, gross margin of 35%, handling cost per refund of $5, number of refunds of 100), the gross profit erased by refunds is $2,600.00; refund rate 6%, revenue after refunds $94,000.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
Related Calculators
Frequently Asked Questions
How is gross profit erased by refunds calculated?
profit erased = refunds × gross margin + refunds × handling cost.
Which figures do I need?
Revenue for the period, refunds issued, gross margin, handling cost per refund, number of refunds. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
Which fees should I include?
Every fee your platform or provider charges on a sale: commissions, payment processing, fulfilment, storage, advertising and the expected cost of returns. Fee schedules change, so check the current rate card.
