Refund Reserve Calculator
Set aside the right cash reserve for refunds from your revenue and refund rate, and see the net revenue you actually keep.
How it works
Monthly reserve = revenue × refund rate · Sunk fees = reserve × processing rate · Net revenue = revenue − reserve
Refunds are a near-certainty at scale, so treating them as a surprise is a cash-flow trap. Setting aside your historical refund rate against current revenue creates a reserve that covers returns without dipping into working capital. The subtle cost is payment processing: most gateways keep their percentage even when you refund the customer, so every reversed sale leaves a small non-refundable fee behind.
Worked example
On $50,000 of monthly revenue with a 4% refund rate, reserve $2,000 a month — $24,000 a year. Because the 2.9% processing fee is not returned, those refunds also sink about $58 in fees you never recover, on top of the refunded amount itself.
Frequently asked questions
What refund rate should I use?
Use your own trailing rate rather than an industry average. If you lack history, digital products often run 1–5% while apparel and impulse categories can exceed 15–30%; start conservative and refine as data accrues.
Do I lose the payment fee on a refund?
Usually yes — most processors keep their percentage (and sometimes a fixed fee) even when the sale is reversed. That is why refunds cost slightly more than the refunded amount, which this reserve accounts for.
How do I lower my refund rate?
Set accurate expectations with clear descriptions, sizing and photos, offer responsive support and exchanges before refunds, and screen out fraud. Fewer surprises at delivery is the biggest lever.
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Educational estimate, not financial advice.