Refund Rate
How much of your revenue you're handing back to customers. Divide total refunds by total revenue. Anything above 5% means something's wrong — bad product photos, wrong sizing, slow shipping, or misleading descriptions.
Example
You processed $20K in orders and gave back $1,600 in refunds. That's an 8% refund rate. For every $100 that comes in, $8 goes right back out.
Why It Matters
Refunds don't just return revenue — they also eat the non-refundable payment processing fee and any shipping costs. An 8% refund rate on a $50K/month store doesn't cost $4K in refunds, it costs closer to $5K once you factor in the fees you'll never recover.
Pro Tip
Pull your refund reasons from Shopify for the last 90 days. Group them by cause (wrong size, damaged, not as described). Fix the top reason first — even a 2% drop in refund rate can add hundreds to monthly profit.
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