How to Calculate Refund rate in BigCommerce

7 minute read

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Running an online store is not always a bed of roses. You have to put in the work to ensure that all processes, including returns and refunds, are seamless. One metric you cannot overlook is the refund rate. It tells you how much of your sales you refunded, which is an important indication of your store's performance. In this article, we will discuss how to calculate refund rate in BigCommerce and provide tips on ways to reduce it.

Understanding Refund Rate and Its Importance

Before diving into the details, let's first clarify what refund rate is and why it matters. Refund rate is the percentage of orders that you refunded, which is calculated by dividing the number of refunded orders by the total number of orders. For example, if you refunded 30 orders out of 500, your refund rate is 6%.

What is Refund Rate?

Refund rate is an essential performance metric because it reveals how satisfied your customers are with your products and services. A high refund rate can indicate product quality issues, poor descriptions, or inadequate customer support, which can hurt your reputation and deter potential customers from purchasing from you.

On the other hand, a low refund rate can indicate that your products and services meet or exceed customer expectations. This can boost your reputation, increase customer loyalty, and attract new customers.

Why is Refund Rate Important for Your Business?

In addition to signaling customer satisfaction, refund rate affects your bottom line. A high refund rate means lost revenue, as you have to return the payment for the refunded orders. It could also mean added costs, such as return shipping fees, restocking fees, or disposal fees, depending on your store policies.

Furthermore, a high refund rate can harm your business's financial stability and growth potential. It can affect your cash flow, lead to inventory shortages, and increase your customer acquisition costs as you try to attract new customers to replace those who were dissatisfied and refunded their orders.

Reducing your refund rate can have a positive impact on your business. By improving the quality of your products and services, providing accurate and detailed descriptions, and offering excellent customer support, you can increase customer satisfaction and loyalty, which can lead to higher sales and revenue. Additionally, a low refund rate can help you build a positive reputation and stand out from your competitors.


Refund rate is a crucial metric for any business that sells products or services. It reflects customer satisfaction and can impact your reputation, revenue, and growth potential. By understanding the importance of refund rate and taking steps to reduce it, you can improve your business's performance and ensure long-term success.

Setting Up Your BigCommerce Store for Refund Tracking

Nowadays, customers have become more conscious about their purchases, and they expect a hassle-free return process. This is where refund tracking comes in handy. It helps you keep track of your refund rate and make necessary changes to your business strategy. Let's move on to how to track refunds in BigCommerce.

Enabling Order Returns and Refunds

Enabling the return and refund feature in your BigCommerce store is easy. You can do it in a few simple steps. First, go to your store's control panel and click on "Settings." Then, select "Returns" and choose the options that suit your business needs. You can set up your return policies, including return windows, conditions, and shipping instructions. This will help you streamline your return process and provide a better experience to your customers.

Customizing Your Refund Policy

Your refund policy is an essential part of your business strategy. It should be clear, concise, and easy for customers to understand. Make sure to include it on your website so that customers can refer to it before making a purchase. Your refund policy should specify the circumstances under which you accept returns or refunds, the timeline for processing refunds, and any associated fees. You can also customize your refund policy to suit your business needs. For instance, you can offer a full refund, partial refund, or store credit, depending on the situation.

Additionally, you can also set up an automated refund process in BigCommerce. This will help you save time and streamline your refund process. You can set up rules for automatic refunds based on certain criteria, such as product type, order value, or customer location. This will ensure that your customers get a quick and hassle-free refund experience.

In conclusion, setting up a refund tracking system in your BigCommerce store is essential for any business that wants to provide a seamless customer experience. By enabling order returns and refunds and customizing your refund policy, you can build trust with your customers and improve your business's overall performance.

Calculating Refund Rate in BigCommerce

Now that you have set up your BigCommerce store for refunds, it's time to calculate your refund rate. There are two ways to go about it: using BigCommerce analytics or manual calculation.

Gathering the Necessary Data

Before you can calculate your refund rate, you need to gather the data required. Go to your store's analytics dashboard, click on "Orders," and select the date range you want to analyze. Then, filter the results to show only refunded orders. Note down the number of refunded orders and the total number of orders during that period.

Using BigCommerce Analytics for Refund Rate Calculation

If you don't want to do the math by hand, you can use BigCommerce analytics to calculate your refund rate. In the Orders section of your dashboard, click on "Reports" and select "Performance." Then, choose "Order Refunds" as your metric and set the date range you want to analyze. BigCommerce will automatically calculate your refund rate.

Manual Calculation of Refund Rate

To calculate your refund rate manually, all you need to do is divide the number of refunded orders by the total number of orders and multiply by 100%. For example, if you had 30 refunded orders out of 500, your refund rate is (30/500) x 100% = 6%.

Analyzing Your Refund Rate

After calculating your refund rate, it's time to analyze the data to identify patterns and trends. This information will help you make informed decisions about your store's products, policies, and customer support.

Identifying Patterns and Trends

Look at your refund rate over different time periods, such as weeks, months, or quarters, and see if there are any significant changes. Identify which products or categories have the highest refund rates and investigate the reasons for them. Check if your refund rate varies by customer location, shipping method, or payment option.

Comparing Your Refund Rate to Industry Benchmarks

Benchmarking your refund rate against industry averages can give you more insights into how your store is doing. This information also helps you set realistic goals and see how you stack up against your competitors. The average eCommerce refund rate is around 8%, according to a Return Magic report, but it varies by industry and product category.

Reducing Your Refund Rate

Finally, let's discuss how to reduce your refund rate and improve your store's performance.

Improving Product Quality and Descriptions

A high refund rate could mean that customers are not satisfied with your products or that they didn't match their expectations. Consider improving your product descriptions, adding more images, and offering detailed specifications. You should also ensure that your products are of high quality, and that you have strict quality control measures in place before they are shipped.

Enhancing Customer Support and Communication

Having a reliable customer support team can help you mitigate disputes and handle returns smoothly. Train your team to be responsive, courteous, and helpful to customers, and provide them with the necessary tools and information to address customer inquiries and complaints. Also, communicate clearly with your customers throughout the returns and refund process, so they know what to expect and don't feel left in the dark.

Streamlining the Returns Process

Simplify your returns process to make it easy and convenient for customers to return products. Offer multiple return methods, such as in-store returns, mail-in returns, or third-party returns, and ensure that they are all easy to access and use. You may also consider offering a self-service return portal where customers can initiate returns and track their progress.


Calculating and analyzing your refund rate is an essential task for any eCommerce business owner. It can give you valuable insights into your store's performance, customer satisfaction, and product quality. By following the tips discussed in this article, you can reduce your refund rate, improve your store's reputation, and boost your revenue.

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