Refund Cost (Total Refund Cost)
The real price of a refund is way more than the amount you hand back. You lose the payment processing fee (it's not refunded to you), you pay return shipping, and someone has to inspect and restock the item. The actual cost can be 20-30% more than the refund amount.
Example
Refunding a $60 order: $60 goes back to the customer + $2.04 payment fee you'll never see again + $8 return label + 15 minutes of staff time. That $60 refund actually cost you closer to $75.
Why It Matters
Most merchants only track the refund amount and miss the hidden costs that pile up on every return. That means your actual refund expense is 20-30% higher than what shows up in Shopify's dashboard.
Pro Tip
Add a line in your monthly P&L for 'hidden refund costs' — payment fees, return labels, and restocking labor. Track it for 90 days and you'll have a real number to justify tighter return policies or restocking fees.
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