Return Rate
Definition
The percentage of units or sales dollars that customers send back.
Want a deeper explanation?
Formula
Return Rate % = Units Returned ÷ Units Sold × 100Returns cost more than the refund: there is outbound and return shipping, processing, and often a unit you cannot resell. Amazon also charges extra for returns above category thresholds.
Track it by product, because high returns often point to a sizing or quality issue. Watch for: returns recorded as an expense instead of reducing sales, which hides the real return rate.
Example
You sold 4,000 units and 360 came back, a 9% return rate.