RTO Shipping Calculator

About this calculator

A return does not cost you nothing; it costs you roughly twice the forward shipping. The parcel goes out, comes back, and neither leg is refunded. The packaging is spent, the handling is real, and anything that cannot go back on the shelf at full value is a loss on top.

The figure that matters is not the cost of a return. It is what returns add to every order that did get delivered, because those are the only orders earning anything.

How to use this calculator

1. Enter how many orders you shipped over a period and what share came back.
2. Enter the forward shipping cost per order. Leave the return cost blank to assume it matches.
3. Add packaging per order, and anything you spend handling a returned parcel.
4. Enter the value lost on a return if returned stock cannot be resold at full price.
5. Read the true cost per delivered order - that is the number your pricing has to carry.

The formula

Returned       = Orders x Return rate
Delivered      = Orders - Returned
Forward total  = Orders x Forward cost
Return total   = Returned x Return cost
Packaging      = Orders x Packaging        (every order shipped)
Other          = Returned x (Handling + Value lost)
Total          = the four above
Per delivered  = Total / Delivered

Packaging is charged on every order shipped, not on every order delivered — the carton on a parcel that came back is still spent. Handling and lost value are charged on returns only.

Worked example

100 orders, a 15% return rate, ₹70 forward, ₹23 packaging, ₹20 handling:

Forward   100 x 70            = 7,000
Return     15 x 70            = 1,050
Packaging 100 x 23            = 2,300
Handling   15 x 20            =   300
Total                         = 10,650
Delivered                     =    85
Per delivered order           = 125.29

The planned cost was ₹93 an order. The real cost is ₹125.29, so returns added ₹32.29 to every delivered order — 35% more than the plan.

Notes and limits

• Use your own return rate. Cash-on-delivery return rates in India commonly run three to five times prepaid rates, so a blended figure hides the problem.
• Couriers usually charge the full rate for the return leg, sometimes more. Very few discount it.
• The value lost on a return is the figure sellers leave out most often. An opened package that has to be sold as an open box is a real loss even where the item is perfect.
• Prepaid orders are worth a discount. If a discount smaller than the RTO premium above moves customers from COD to prepaid, it pays for itself.
• This assumes a returned order earns nothing. Where you resell returned stock at full price, set the value lost to zero.

What this calculation assumes

• Packaging is spent on every order shipped, including the ones that come back.
• Where the return cost is left blank, it is assumed equal to the forward cost.
• A returned order earns nothing; any resale value is handled through the value-lost field.
• Marketplace fees on a cancelled order are not modelled - some are refunded and some are not.