Return allowance: put the cost of returns into every price

Returns are a cost of selling, so price them in

Even careful sellers get returns. A buyer orders the wrong size, a parcel arrives crushed, an item isn't quite what someone pictured. Each return can cost a return label, a lost outbound postage fee and sometimes an item that can't be resold at the same price. If your prices assume zero returns, those costs come straight out of profit. A small allowance built into every price spreads them across all your sales instead.

This guide shows how to estimate a return allowance from your own history, with notes on what eBay, Mercari and Poshmark's return rules mean for sellers, checked November 8, 2026.

Which returns you can and can't control

Platforms separate returns you choose to accept from returns they require:

The pattern is consistent: platforms protect buyers when the item doesn't match the listing. Accurate descriptions reduce the returns you can't refuse, and your return policy decides the rest. The eBay returns settings guide covers eBay's options in more depth.

Step 1: Count your returns

Look at your last 100 sales, or as many as you have. Count how many came back, and why. In this chosen example:

A 4% return rate in this example. Yours may be higher or lower depending on category, policy and listing accuracy.

Step 2: Cost a typical return

For each return, add up what it actually cost. In this example, an average return costs:

Many sellers forget the lost value. A returned sweater might come back with a pulled thread or a missing tag and sell for less the second time.

Step 3: Turn it into a per-sale allowance

Multiply the number of returns by the average cost, then divide by all sales:

• 4 returns × $12 = $48 in return costs.
• $48 ÷ 100 sales = $0.48 per sale.

So in this example, adding about 50 cents to the cost side of every pricing calculation covers returns on average. On a $30 item, that's under 2% of the price, but on thin-margin items it can be the difference between a small profit and a loss.

Step 4: Adjust for category

Return rates vary by category. Clothing with size issues may see more changed-mind requests where allowed; tested electronics may see fewer but costlier returns. Keep a separate allowance for categories that behave differently. The inventory and returns manual covers tracking returned stock.

Step 5: Reduce the rate, then shrink the allowance

The cheapest return is the one that never happens:

• Photograph every flaw; see the showing defects guide.
• Give measurements for clothing; see the thrift clothing measurements manual.
• Test electronics and say exactly what was tested; see the inspect and test manual.
• Pack to survive the trip; see the shipping manual.

Each improvement lowers your return count, and the allowance falls with it. Recalculate every few months.

Step 6: Document every return when it arrives

When a return comes back, photograph it on arrival before deciding anything. The return arrives manual explains how to record condition without accusing the buyer.

The mini calculator

The calculator on this page subtracts costs from a sale price. Enter the sale price, what you paid for the item, and all other costs with the return allowance added in. The example uses a $30 sale, a $10 item cost and $11.48 of other costs: an assumed $11.00 of fees and postage plus the $0.48 allowance.

Common mistakes

• Pricing as if returns never happen.
• Counting the return label but not the lost resale value.
• Assuming a no-returns policy means no returns.
• Using one allowance for categories with very different return patterns.
• Never recalculating after improving listings.

Spread the cost

A return allowance turns occasional painful losses into a small, predictable cost on every sale. Count your returns, cost them honestly and add the per-sale share to every price.