What is Refund Rate, and how do you calculate it?
In short – Percentage of transactions that result in refunds. A key marketplace metrics you should track.
Refund Rate Formula
Refund Rate = (Number of Refunds ÷ Number of Transactions) × 100%
Refund Rate reflects the proportion of sales that are refunded to customers. High refund rates can impact profitability and customer satisfaction.
Monitoring refund rates helps in identifying issues with product quality, fulfillment, or customer service. It is important for maintaining financial health.
How can you find your Refund Rate?
You should generally be able to calculate your Refund Rate with tools you already posess. If that's not the case, signing up for an analytics tool may make sense.
Among others, twosided is one of the tools you could consider. Out-of-the-box, you'll get over two dozens marketplace KPIs and detailed tracking for your supply, demand and other factors that determine marketplace health.
Explore other metrics
Order Frequency
Average number of orders placed by a buyer within a specific period
Cross-Sell Rate
Percentage of transactions that include additional products or services
Supply-Demand Ratio
Ratio of available listings to active buyers
Listing Quality Score
A metric evaluating the quality of product listings based on predefined criteria
User Net Adds
Net increase in the number of users over a specific period