What the calculator counts
Kept-order contribution is average order value minus product cost and outbound fulfillment. A returned order assumes a full refund and no retained product revenue; it counts original shipping, reverse shipping, handling, any payment fee you expect to retain, and unrecovered product cost.
Expected contribution blends kept and returned orders using your return rate. The baseline assumes every fulfilled order is kept; the difference estimates the period contribution impact of returns.
Worked example
For 1,000 orders at a $60 average order value, $22 product cost and $6 outbound fulfillment, an 8% return rate means 80 expected returns. With $7 return shipping, $3 handling, no non-refundable payment fee and 90% inventory recovery, a kept order contributes $32 and a returned order about −$18.20.
The modeled period contribution is about $27,984 versus $32,000 if all orders were kept, a $4,016 reduction. This example assumes no payment fee on kept orders and no retained processing fee on returns; change those inputs to match your provider terms.
Use consistent store data
Use fulfilled orders and returned orders from the same period and definition. If your report counts returned units rather than orders, the order-level estimate may not fit multi-item baskets without adjustment.
Inventory recovery is the share of product cost preserved through resale or reuse, not the refund rate. Enter only payment fees you expect not to recover after a refund.
Limits of this estimate
The model assumes full refunds, one average product-cost amount per order and one return rate for the period. It excludes exchanges, partial or returnless refunds, taxes, chargebacks, discount codes, resale revenue, advertising, overhead and customer lifetime value.
Use the result to compare scenarios, then confirm fee treatment with your provider and reconcile inputs with finance and returns data.