Emergency · United States

Customer Refund Decision Calculator

Enter item cost, selling price, shipping, replacement cost, and any restock loss. The calculator compares the four common resolutions so you can pick the one with the lowest true cost.

Inputs

Item cost (COGS) ($)

Selling price ($)

Shipping cost you paid ($)

Reship cost ($)

Restock recovery on return (%)

Portion of price recovered when the item comes back and is resold.

Partial refund offered (%)

Store credit bonus (%)

Extra value added to store credit vs cash refund.

Result

Store credit (+20%): $0.00
Partial refund (30%): $13.50
Replacement: $17.00
Full refund: $29.50

Lowest true cost is emphasized. Customer experience also matters — never optimize only for cost.

Store credit assumes ~50% redemption. Adjust if your data differs.

Direct answer

For a damaged or defective order, replacement is usually the cheapest resolution when COGS is low and shipping is short. Full refund is cheapest when the item can be resold at high recovery. Store credit is cheapest only if redemption is under 50%.

Key takeaways

Replacement is best for low-COGS, high-price items.
Refund is best when the item can be resold.
Partial refund preserves the sale on minor issues.
Never pick only on cost — factor in review risk.

Method

Refund cost = Price − Restock recovery. Replacement cost = Replacement COGS + Reship. Partial = Price × Partial %. Store credit = (Price × Bonus %) − Retained margin on next order.

How this tool works

The calculator computes the net cost of each resolution using your item cost, price, shipping, and expected recovery. It ranks the four options from cheapest to most expensive.

When to use this

Use on any refund request where the customer is open to alternatives. Do not use for lost-in-transit — those need the lost package template.

Step-by-step

Confirm the reason for the refund request.
Enter item cost, price, shipping, and restock recovery.
Enter a realistic partial % and store credit bonus.
Present the top two options to the customer.
Log the choice and the reason.
Review outcomes monthly to tune your policy.

Situation	Usually cheapest
Damaged, low COGS	Replacement
Wrong size, resellable	Refund
Minor cosmetic	Partial refund
Change of mind	Store credit

Common mistakes

Defaulting to full refund without doing the math.
Refusing to send a replacement when it's cheaper.
Offering store credit to customers who will never return.
Ignoring the review risk of a slow decision.

Frequently asked questions

Why is replacement often cheaper than refund?

Because you keep the original revenue and only pay COGS + reship. It's most useful for low-COGS items.

When is a partial refund the right move?

For minor issues where the customer is willing to keep the item — a 20–30% partial is often accepted.

Is store credit really cheaper?

Sometimes. It depends on redemption rate. If most customers never redeem, it's the cheapest option.

Method and guidance reviewed by the AIFlowBiz Editorial Team.