hidden costs
When putting together a profitability calculation for a new product, it's common to think of returns as "the customer changed their mind, Amazon handles it." The reality is more costly: a return is rarely neutral for the seller.
When a customer returns a unit, it can't always be resold as new. Depending on the category and the condition it comes back in, it commonly ends up:
In any of these scenarios, the product cost and the freight you already paid to ship it to Amazon are fully or partially lost.
Return rates vary a lot by product type. Clothing and footwear tend to have the highest rates (sizing and fit issues), followed by electronics (perceived incompatibility or malfunction). Simple products with no size or color variants tend to have noticeably lower rates.
The simplest way not to ignore this cost is to apply an estimated return percentage to your unit cost (factory + freight + fees), and subtract it from net profit. You don't need an exact number — even a conservative estimate (say, 5% for low-risk products, 15-20% for clothing/footwear) gives you a much more realistic picture than not counting it at all.
The calculator already includes an estimated return rate field, which is automatically deducted from your net profit.
Open the calculator →