The share of your sales that comes back, in items and in pounds, and what those returns cost you.
Return rate
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Enter the items sold and returned to see the rate.
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Enter how many items you sold in a period and how many of those items came back: you get the return rate to two decimal places, with the workings. Add the value of those sales and the amount refunded for the rate by value and the average refund, then the average cost per return to see what returns cost you on top of the refunds.
A return rate compares returns with the sales they came from. For October's sales, count the October items that came back, even if the parcel arrived in November, rather than the returns received during October, some of which come from earlier sales. Otherwise a quiet month that follows a busy one shows a misleading rate, sometimes above 100%.
A consumer who buys online, by phone or by mail order can cancel up to 14 days after the goods are delivered, then has 14 days from telling you to send them back (regulations 30 and 35 of the Consumer Contracts Regulations 2013, which apply across the UK). So an item can still come back about four weeks after delivery, plus the time in the post, or later if you offer a longer returns window: a rate worked out too early is too low. Faulty goods come under the Consumer Rights Act 2015, whose short-term right to reject lasts 30 days.
The rate by number of items tells you what share of the items you sold came back. The rate by value tells you what share of your sales you refunded: it is higher when the items returned cost more than average. Enter both amounts on the same basis, with or without VAT; if all your goods carry the same VAT rate, the rate by value is the same either way.
The average cost per return covers what a return costs you on top of the refund: the return label if you pay for it, receiving, checking and repackaging. The customer pays the direct cost of sending goods back, unless you agreed to pay it or did not tell them they would have to (regulation 35). Rates are rounded to two decimal places and amounts to the nearest penny, with halves rounded up.
Return rate (%) = items returned ÷ items sold × 100.
Return rate by value (%) = amount refunded ÷ value of the same sales × 100.
Sales net of refunds = sales value − amount refunded.
Average refund per return = amount refunded ÷ items returned.
Cost of returns = items returned × average cost per return.
Net sales after return costs = sales net of refunds − cost of returns.
An online shop sells 1,250 items in October for £52,480.00. By mid-December, once the cancellation and return periods have run out, 160 of them have come back and it has refunded £7,390.50. Return rate = 160 ÷ 1,250 × 100 = 12.8%. Rate by value = £7,390.50 ÷ £52,480.00 × 100 = 14.08%: the items returned were dearer than average, with an average refund of £7,390.50 ÷ 160 = £46.19. At £4.75 per return, the returns cost 160 × £4.75 = £760.00, and sales net of refunds of £45,089.50 come down to £44,329.50 once that cost is taken off.
Divide the number of items returned by the number of items sold, then multiply by 100. 45 items returned out of 500 sold gives 45 ÷ 500 × 100 = 9%. Count the returns of the items sold in the period, even those that arrive after it ends.
Either works, as long as you do not mix them. A rate per item measures the share of products that come back; a rate per order measures the share of orders with at least one return. An order of three items with one sent back counts as 1 return out of 3 items, but 1 order out of 1. For a rate per order, enter orders in both count fields.
Because a return can only come from an item that was sold. If you count the returns received during a month, some come from the previous month's sales, and after a busy month they can outnumber the sales of the next one. Link each return to the month of its sale.
Once returns can no longer arrive. A consumer has 14 days from delivery to cancel, then 14 days from telling you to send the goods back, so wait at least four weeks after the last delivery, plus the time in the post, and longer if you offer a longer returns window. These periods apply to distance sales to consumers.
Everything a return costs you on top of the refund: the return label if you pay for it, the time spent receiving and checking the item, repackaging, and the loss in value of items that can no longer be sold as new. Divide a month's total by that month's returns to get an average cost.
Yes, if you include them in the amount refunded. When a consumer cancels, you must refund what they paid, including the standard delivery charge, and unless you offered to collect the goods you must do so within 14 days of getting them back or of receiving evidence that they were sent, whichever is sooner (regulation 34). Then include the delivery charges you billed in the sales value too, so the two amounts compare like with like.
This calculator gives general information, not legal, tax, financial or accounting advice. The legal periods quoted apply to distance sales to consumers in the UK: check your own situation with a professional.
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