Revenue and orders · P&L line 11
Return rate
The share of what you sold that came back.
Formula
Refunded value ÷ gross revenue
Return rate is the share of what you sold that came back: refunded value over gross revenue, or refunded units over units sold. The unit version is the one to read per product, and the headline rate always understates the real damage, because a refund gives back the revenue but not the costs.
The headline rate understates the damage because a return gives back the revenue and the goods but not the outbound shipping, the pick and pack, or the payment fee, and it adds a return label and handling on top. The full arithmetic of that gap is in what a return really costs.
Watch it per product rather than in total. One badly sized item can carry a whole category's rate, and the fix for that product (a size guide, a better photo, a materials note) is cheaper than any campaign.
Timing matters too: refunds arrive weeks after their orders, so a young cohort always looks better than it will end up. Judge a product's rate on orders old enough for their returns to have arrived.
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