5 days ago
0
0
Posted On: October 14th 2026, 09:20 pm
Free returns sound customer-friendly, but the math tells a different story.
Say you sell a $60 product that costs $25 to make (hypothetical numbers). Every return hits you three ways:
1. Reverse shipping: $8
2. Restocking labor: $3
3. Damage and unsellable units: about 20% of returns can't be resold, so $5 more per return
Total cost per return: $16.
At a 20% return rate (common for apparel and fashion), that's 20 returns on 100 orders. The math: 20 returns times $16 equals $320 in return costs.
Your gross profit was $3,500. Net profit after returns: $3,180. That's $31.80 per order instead of $35.
Free returns cost you $3.20 per order, or about 9% of your profit. Not nothing.
The real cost isn't just the reverse label. It's the restocking time, the damage rate, and the inventory you can't sell again. Track it, or you're flying blind on margin.
We do this for you weekly.
#pricingstrategy #dtcbrand #ecommercetips #shopifystore
Say you sell a $60 product that costs $25 to make (hypothetical numbers). Every return hits you three ways:
1. Reverse shipping: $8
2. Restocking labor: $3
3. Damage and unsellable units: about 20% of returns can't be resold, so $5 more per return
Total cost per return: $16.
At a 20% return rate (common for apparel and fashion), that's 20 returns on 100 orders. The math: 20 returns times $16 equals $320 in return costs.
Your gross profit was $3,500. Net profit after returns: $3,180. That's $31.80 per order instead of $35.
Free returns cost you $3.20 per order, or about 9% of your profit. Not nothing.
The real cost isn't just the reverse label. It's the restocking time, the damage rate, and the inventory you can't sell again. Track it, or you're flying blind on margin.
We do this for you weekly.
#pricingstrategy #dtcbrand #ecommercetips #shopifystore
More posts
