# Refund Processing Cost Calculator

> Add up what each refund really costs beyond the money returned: payment fees not given back, return shipping, handling time and unsellable stock.

Category: Commerce & retail · Applies to: Worldwide · Last updated: 2026-10-29
Interactive calculator: https://calculators.geekmidst.com/calculators/refund-processing-cost-calculator

Refunding the order is only part of it. Payment fees are often not returned, someone pays for the return label and handling, and some returned items cannot be resold.

Also called: Return processing cost calculator, Cost per return calculator.

## Inputs
- Average refunded order value (default 60)
- Refunds per month (default 120)
- Payment fee not returned (unit %; default 2.9; optional)
- Fixed payment fee not returned (default 0.30; optional)
- Refund or chargeback fee (default 0; optional)
- Return shipping you pay (default 7.50; optional)
- Handling time per return (unit min; default 12; optional)
- Labour cost per hour (default 18; optional)
- Product cost (COGS) per order (default 22; optional)
- Returns that cannot be resold (unit %; default 20; optional)
- Currency

## Results
- Cost per refund
- Monthly cost of refunds
- As % of the refunded order
- Payment fees lost
- Handling labour
- Stock written off (average)

## Formula

```
Cost per refund = Order × Fee% + Fixed fee + Refund fee + Return shipping + Minutes ÷ 60 × Hourly rate + Product cost × Unsellable%
```

Where:
- Fee%: payment fee kept by the provider when you refund
- Unsellable%: share of returned items that must be written off

## Worked example
1. Fees lost = 60 × 2.9% + 0.30 = 2.04.
2. Labour = 12 ÷ 60 × 18 = 3.60; write-off = 22 × 20% = 4.40.
3. Per refund = 2.04 + 7.50 + 3.60 + 4.40 = 17.54.
4. Monthly = 17.54 × 120 = 2,104.80.

**Result:** Each refund costs about 17.54 on top of the money returned, 29% of the order value, or 2,104.80 a month.

## What the result means

If the cost per refund is a large share of the order, reducing returns (better sizing, photos, descriptions) is often worth more than cutting handling time. For low-value items, a refund without return may be cheaper.

## Assumptions and limits
- The refunded amount itself is excluded: it reverses the sale.
- Write-off is the product cost times the share of returns that cannot be resold.
- Customer-service time, restocking fees charged to customers and recovery from liquidation are not included; add them to the inputs if relevant.

## Questions

### Do payment providers return their fee when I refund?

Policies differ by provider and change over time. Check your provider’s current terms and enter 0 if fees are returned.

### Is a chargeback the same as a refund?

No. A chargeback is a dispute through the card issuer and usually carries an extra fee; enter it in the refund or chargeback fee field.

## Related calculators
- [Payment Gateway Fee Calculator](https://calculators.geekmidst.com/calculators/payment-gateway-fee-calculator)
- [POS Cash Reconciliation Calculator](https://calculators.geekmidst.com/calculators/pos-cash-reconciliation-calculator)
- [Profit Margin Calculator](https://calculators.geekmidst.com/calculators/profit-margin-calculator)

Source: GM¹X CalcVerse — https://calculators.geekmidst.com/calculators/refund-processing-cost-calculator