Shopify Refund Cost Calculator
See the true cost of refunds — not just the returned amount, but lost fees and return shipping too.
How It Works
Most merchants think a $100 refund costs $100. The reality is closer to $110-$120 when you factor in non-refundable payment processing fees and return shipping costs.
Total Refund Cost = Refund Amount + Lost Payment Fees + Return Shipping Cost
Example
A store with $20,000 monthly revenue, 8% refund rate, $75 average order, 2.9% payment fees, and $8 return shipping:
- Refunded Amount: $1,600 (8%)
- Refunded Orders: ~21 orders
- Lost Payment Fees: $46.40
- Return Shipping: $168
- Total Refund Cost: $1,814.40 (9.1% margin loss)
Frequently Asked Questions
How much do refunds really cost a Shopify store?
Refunds cost more than the refunded amount. You also lose the original payment processing fee (usually not returned), pay for return shipping labels, and spend labor on restocking. A $100 refund can cost your store $110-$120 in total.
What is a normal refund rate for Shopify stores?
The average e-commerce refund rate is 5-10%. Fashion and apparel stores often see 10-20% due to sizing issues. A refund rate below 5% is considered healthy.
Do I get my Shopify payment fees back after a refund?
In most cases, no. Shopify Payments does not refund the processing fee when you issue a refund. This means every refund costs you 2.9% + $0.30 on top of the returned amount.
How can I reduce my Shopify refund rate?
Improve product descriptions and photos, add size guides, use high-quality product videos, set clear return policies, and address customer issues proactively before they request a refund.
What is the difference between a refund and a chargeback?
A refund is initiated by you (the merchant) when a customer asks for their money back. A chargeback is forced by the customer's bank and comes with additional dispute fees ($15-100) and can threaten your payment processing account.
Does this calculator account for restocking costs?
This calculator covers the main financial costs: refunded amount, lost payment fees, and return shipping. Restocking labor and inventory damage are additional hidden costs not included here.