Return Rate Calculator by SKU

Return rate = units returned ÷ units sold × 100. A SKU with 216 returns from 1,200 sold runs at 18.00%, against 6.73% for the whole example catalog.

Catalog return rate (by unit) 6.73% 1,050 of 15,600 units returned · 5 SKUs

By value8.36%

Cost of returns$14,293

SKUs flagged2

Your SKUs

Up to 15 SKUs. Use one period and one system for every line.

Flag SKUs at or above this multiple of the catalog rate

Each line covers

Cost of a return (example values, replace with yours)

Return label per return ($)

Receive, inspect, restock ($)

Returns not resellable (%)

Product cost (% of price)

Cost per return = label + processing + (share not resellable × price × product cost %). Take the label and labor figures from your carrier and warehouse invoices.

Order-level return rate (optional)

Orders shipped

Orders with at least one return

Return rate by order7.75%

Average cost per return$13.61

Returns cost as share of revenue2.39%

Revenue in the period$599,000

One point off the rate, per period$2,123.48

One point off the rate, per year$25,481.77

SKU ranking

Sorted by return cost above the catalog rate: the money a SKU would not lose if it returned at the catalog average.

#	SKU	Return rate	× catalog	Cost per return	Cost of returns	Cost above catalog rate
1	Denim jacketReview	18.00%	2.67×	$16.09	$3,475.44	$2,175.86
2	Linen shirtReview	11.00%	1.63×	$13.63	$3,598.32	$1,396.55
3	Running shorts	8.00%	1.19×	$12.67	$5,068.00	$804.06
4	Leather belt	3.00%	0.45×	$12.85	$1,156.50	$0.00
5	Canvas tote	2.00%	0.30×	$12.43	$994.40	$0.00

The calculation runs in your browser. The figures loaded on first view are an example catalog, not benchmarks.

Formula

How to Calculate Return Rate in Ecommerce, Step by Step

Pick one period and one system. Take units sold and units returned for the same month from the same source, such as your store platform or your warehouse system.
Divide and multiply by 100. Units returned ÷ units sold × 100 gives the return rate. Do the same for each SKU, not just the whole catalog.
Compare each SKU with the catalog. Divide a SKU’s rate by the catalog rate. The calculator flags 1.5× or higher by default. Set your own threshold in the tool.
Put a cost on it. Multiply each SKU’s returns by its cost per return, then rank SKUs by the cost above the catalog rate.

Output	Formula	What it answers
Return rate by unit	units returned ÷ units sold × 100	How many items the warehouse will receive back.
Return rate by order	orders with a return ÷ orders shipped × 100	How many customers send something back.
Return rate by value	Σ(returned × price) ÷ Σ(sold × price) × 100	How much revenue reverses.
SKU index	SKU return rate ÷ catalog return rate	How far a SKU sits from your own average.
Cost per return	label + processing + (not resellable % × price × product cost %)	What one return of that SKU costs you.
Cost above catalog rate	max(0, returned − sold × catalog rate) × cost per return	What a SKU loses beyond the catalog average.
Value of one point	units sold × 1% × average cost per return	What a one-point fall in the rate saves.

The catalog rate is volume-weighted. It is total returns over total units sold, not the average of your SKU rates. The two differ whenever SKUs sell in different volumes.

Worked example

An Austin, Texas Apparel Brand’s Return Rate by SKU

An apparel brand in Austin, Texas ships nationwide from one US warehouse. These are one month of example figures in USD, the same ones the calculator loads.

SKU	Units sold	Returned	Price paid	Return rate	× catalog	Cost per return	Cost of returns
Denim jacket	1,200	216	$89	18.00%	2.67×	$16.09	$3,475.44
Linen shirt	2,400	264	$48	11.00%	1.63×	$13.63	$3,598.32
Running shorts	5,000	400	$32	8.00%	1.19×	$12.67	$5,068.00
Leather belt	3,000	90	$35	3.00%	0.45×	$12.85	$1,156.50
Canvas tote	4,000	80	$28	2.00%	0.30×	$12.43	$994.40
Catalog	15,600	1,050	$599,000 revenue	6.73%	1.00×	$13.61	$14,292.66

Cost inputs, all examples: $7.50 return label, $3.25 to receive, inspect and restock, 15% of returns not resellable, product cost at 40% of price.

6.73%catalog return rate by unit

8.36%return rate by value, so pricier items return more

$14,293cost of returns this month (2.39% of revenue)

$2,123value of one point off the rate, per month

The denim jacket is 7.7% of units sold but 20.6% of returns and 24.3% of return cost.
2 SKUs pass the 1.5× flag. Together they cost $3,572.41 more than they would at the catalog rate.
About 158 of the 1,050 returned units are written off at the 15% not-resellable share.
The order rate is 7.75% (930 of 12,000 orders), a different basis from the unit rate. Quote the basis every time.

Why by SKU

A Catalog Return Rate Hides the SKUs Doing the Damage

One overall figure tells you returns exist. A rate per SKU tells you which listing, size chart or supplier to fix first.

23.1%

of units sold

The share of the example brand’s units that come from its flagged SKUs.

45.7%

of units returned

The share of all returns those same SKUs send back to the warehouse.

49.5%

of return cost

Their share of the cost of returns, which also reflects their higher prices.

SKU pattern	What it usually points to	Where to look first
High rate, low volume	A listing or fit problem on one product	Size chart, photos and description against the item
Moderate rate, high volume	The biggest absolute count of returns	Packaging damage and reason codes across the line
Rate rising month on month	A batch, supplier or listing change	Recent supplier lots and edits to the product page
Value rate above unit rate	Expensive items return more often	Premium range detail pages and sizing
One channel far above the rest	Channel policy or audience difference	Marketplace return terms and traffic source
Many units per returned order	Customers ordering several sizes to keep one	Fit guidance and size recommendations

Three bases

Units, Orders and Value Give Three Different Return Rates

Most arguments in a returns review come from comparing two different bases. Name the basis every time you quote a rate.

Unit basis

Counts items. Use it for warehouse rostering, dock space and inspection capacity. It is the basis for SKU-level rates.

Order basis

Counts orders with at least one return. Use it for customer experience and support workload. One order can hold several returned units.

Value basis

Counts dollars returned against revenue. Use it for finance, because it tracks the money that reverses. Use price paid, not list price.

Why two systems disagree	What it does to the rate	Fix
Orders placed vs orders shipped	Lowers the rate when cancellations are common	Use orders or units shipped as the denominator
Refunds counted as returns	Raises the rate with refunds that had no goods	Count only physical receipts into the warehouse
Returns received vs returns requested	Raises the rate with items never sent back	Count on receipt, and track open requests apart
Exchanges in or out	Moves the rate depending on the system	Decide once and write the rule down

Cost of returns

What Goes Into the Cost of a Return

The calculator counts three costs that scale with every return, and leaves out costs that vary too much to assume.

FreightReturn label

What you pay to bring the item back: a prepaid label, a pickup fee or a carrier return service.

LaborReceive, inspect, restock

Booking the parcel in, grading the item, repacking it and putting it back into sellable stock.

Write-offNot resellable

The product cost of units that are damaged, used or past season. Price × product cost %.

Left outVaries too much

Original outbound shipping, payment fees, support time and markdowns. Add them to processing if you track them.

Cost of one return at different prices

Calculated with the tool’s formula and the example label ($7.50), processing ($3.25) and product cost (40% of price).

Price paid	5% not resellable	15% not resellable	30% not resellable
$20	$11.15	$11.95	$13.15
$50	$11.75	$13.75	$16.75
$100	$12.75	$16.75	$22.75
$200	$14.75	$22.75	$34.75

The business case

What One Point of Return Rate Is Worth a Year

A percentage is hard to fund. The same point as dollars a year is a business case. Each cell is monthly units × 1% × cost per return × 12.

Units sold per month	Returns avoided per month	At $10 per return	At $15 per return	At $25 per return
2,000	20	$2,400 a year	$3,600 a year	$6,000 a year
5,000	50	$6,000 a year	$9,000 a year	$15,000 a year
15,600	156	$18,720 a year	$28,080 a year	$46,800 a year
25,000	250	$30,000 a year	$45,000 a year	$75,000 a year
50,000	500	$60,000 a year	$90,000 a year	$150,000 a year

Read it as an estimate. The returns you prevent may not cost the average amount, so real savings can differ from the table. Re-run the calculator after each change to see what moved.

Benchmarks

Build Your Own Baseline Before You Compare

Published return rates use different bases, samples and periods, so this page quotes none. Your own history, by SKU, is the yardstick that holds up.

Pull twelve months of units sold and units returned from one system only.
Record the received date and the original ship date on every return.
Choose cohort or calendar matching, then write the choice down.
Split the rate by SKU, category, channel and destination state.
Separate customer returns from carrier failures and undelivered parcels.
Mark peak and promotion months so spikes are not read as a trend.
Keep the unit, order and value rates side by side.
Set your review threshold from your own spread, not an article.
Re-run the numbers monthly and watch the direction per SKU.

Reason codes

Turn a High SKU Return Rate Into a Fix

The rate tells you where to look. The return reason tells you what to change. Keep the reason list short and make it required.

Return reason	Likely cause	First fix to test
Too small or too large	Size chart or fit notes do not match the item	Measured size chart per SKU, fit notes on the page
Not as described	Photos, color or material description are off	New photos in daylight, exact material and dimensions
Arrived damaged	Packaging fails in transit	Stronger inner packaging, a drop test on the carton
Wrong item sent	Picking or labelling error	Barcode scan at pick and pack, check SKU labels
Defective	Supplier quality issue	Inspect the next lot, raise it with the supplier
No longer needed	Impulse or multi-size buying	Clearer sizing help, review the return window

Getting it right

Six Mistakes That Distort a Return Rate

Averaging SKU rates

In the example, the simple average of the five SKU rates is 8.40%. The volume-weighted catalog rate is 6.73%. Only the second is your return rate.

Mixing periods

Returns from this month against sales from last month swing the rate whenever volume changes. Match the periods, or cohort match.

Mixing systems

Sales from the store platform and returns from the warehouse rarely count the same things. Take both numbers from one source.

Judging tiny SKUs

Two returns from ten sold is 20%, but it says little. Wait for enough volume before acting on one SKU’s rate.

Counting only the label

Freight is the visible cost. Processing labor and written-off stock sit on top of it, so include all three.

Using list price

During promotions, list price overstates the value returned. Use the average price customers actually paid.

Next step

Related Ecommerce Calculators

Markup and margin calculator Check the gross margin each SKU earns before returns take their share. Marketplace fee calculator See what a sale nets after marketplace fees, then compare it with return cost. 3PL cost calculator Estimate fulfillment cost per order, with a buffer for returns. Carrying cost calculator Price the cost of holding stock, including units waiting in a returns queue.

See all free logistics tools, or read how Locad handles ecommerce fulfillment and warehousing, where returns are received and restocked.

FAQ

Return Rate Calculator Questions

Divide units returned by units sold in the same period, then multiply by 100. In the example on this page, 1,050 returns from 15,600 units sold is a return rate of 6.73%. Use the same period and the same system for both numbers, or the rate will drift.

Run the same formula for each SKU on its own: that SKU’s units returned divided by its units sold, times 100. Then compare each result with the catalog rate. A denim jacket with 216 returns from 1,200 sold runs at 18.00%, or 2.67× the catalog’s 6.73%.

Use the same shape with store data: items returned divided by items sold, times 100, for one period. Many retailers also track the value version, refunds divided by gross sales. Exclude exchanges if you only want lost sales, and say whether you did.

Track all three and always name the basis. The unit rate sizes the warehouse workload. The order rate shows how many customers send something back. The value rate shows how much revenue reverses. If the value rate is higher than the unit rate, pricier items are coming back more often.

A simple average gives every SKU the same weight, however much it sells. The overall rate weights each SKU by volume. In the example, the simple average of the five SKU rates is 8.40%, while the true catalog rate is 6.73%. Always quote the volume-weighted figure.

A return received in June may belong to an order shipped in May. Cohort matching ties each return to its original ship date and is more accurate, but it closes later. Calendar matching compares returns received with units shipped in the same period. Pick one and keep it.

This calculator adds the return label, the labor to receive, inspect and restock, and the product cost written off on units that cannot be resold. With the example inputs, one return of the $89 jacket costs $16.09. Replace every example input with figures from your own invoices.

There is no single good number. Rates differ by category, price point, channel and return policy, and published averages use different bases and samples. Build a baseline from twelve months of your own data, by SKU and category, and manage the trend against it.

Multiply units sold by 1% to get the returns you would avoid, then multiply by your average cost per return. In the example that is 156 returns × $13.61 = $2,123.48 a month, or $25,481.77 a year.

No. This page measures product returns: goods customers send back after buying. It does not calculate rate of return on an investment, ROI, interest or anything to do with a tax return.

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