Sales return allowance calculator
Forecast net sales and gross profit for several expected return rates. See the refund liability, the value of goods you expect back and the return rate that would wipe out gross profit.
Gross sales from 0.01 and cost of sales from 0, both up to 1,000,000,000,000, with no more decimal places than the currency uses. Up to 10 return rates from 0 to 100 percent, and restocking fee and recovery loss from 0 to 100 percent, all with two decimal places. Calculated on your device. Download a JSON report and CSV files. Up to 1,000,000 characters. Review the settings before running.
Your result
How to use Sales return allowance calculator
- Enter gross sales for the period and the cost of the goods in those sales.
- List the return rates you want to test.
- Enter any restocking fee you keep and your recovery cost and loss in value on returned goods.
- Calculate, compare the scenarios, then download the report.
Useful next steps
Refund liability and net sales
When customers can return goods, IFRS 15 Revenue from Contracts with Customers (IASB, May 2014), paragraph B21, recognises revenue only for the consideration you expect to keep, plus a refund liability for what you expect to refund. Here the refund liability is gross sales times the return rate times one minus any restocking fee you keep, and net sales are gross sales minus that liability. At 8% of 250,000.00, the liability is 20,000.00 and net sales are 230,000.00.
Goods you expect back
Paragraph B25 measures the asset for goods you expect to recover at their former carrying amount less the expected costs to recover them, including any loss in their value. The calculator takes cost of sales times the return rate times one minus your recovery cost and loss percentage, and removes that from cost of sales. At 8% with a 15% recovery loss, 140,000.00 of cost gives a return asset of 9,520.00 and a gross profit of 99,520.00.
Break-even return rate and limits
The break-even return rate is the rate at which gross profit falls to zero: gross profit before returns divided by the net sales lost per unit of return rate less the cost recovered, 110,000 divided by 131,000 in the example, or 83.97%. Return rates come from your own history or forecast. This is an arithmetic model for planning, not accounting, audit or tax advice, and it does not handle exchanges, partial refunds or returns that fall in a later period.