---
title: "Refunds counted twice in an offer's margin"
description: "A refund reserve taken off revenue and then summed again inside total cost understates margin by the whole reserve. The worst hit are high-return categories."
url: https://offersuite.io/articles/refunds-counted-twice
updated: 2026-10-13
---

# Refunds counted twice in an offer's margin

A refund reserve taken off revenue and then summed again inside total cost understates margin by the whole reserve. The worst hit are high-return categories.

Spreadsheet mistake 3 of 9

## The mistake

A forecast sets aside a share of revenue for refunds. There are two honest ways to book it: take it off the top and call the rest net revenue, or leave revenue whole and list the reserve as a cost. Both give the same margin.

The mistake is doing both. One column shows net revenue, already reduced by the reserve. Further right, total cost sums a range that includes the refunds column. Margin is net revenue minus total cost, and the reserve has been subtracted twice.

## A worked example

An apparel order of $120.00, shipped free, with a refund reserve of 19.3%, the share of online sales that NRF estimates is returned. The reserve is $23.16.

Counted once, the order's costs come to $80.84 and it keeps $39.16, which is 32.6% of revenue.

The sheet starts from a net revenue of $96.84 and subtracts the same $80.84, reserve included. It shows $16.00, or 16.5% of net revenue.

One apparel order, with the refund reserve counted once and twice

| Line | The sheet | Counted once |
| --- | --- | --- |
| Revenue | $120.00 | $120.00 |
| Refund reserve, taken off revenue | −$23.16 | not taken |
| Costs before the reserve | −$57.68 | −$57.68 |
| Refund reserve, as a cost | −$23.16 | −$23.16 |
| Margin | $16.00 | $39.16 |
| Margin % | 16.5% | 32.6% |

The order's figures are computed by the margin engine in Offer Suite's own code, in whole cents. The sheet's are the same order with the mistake applied.

## What it does to the decision

The sheet shows less than half the margin the order has. Understated margin reads as caution, and it still costs money. A discount, a gift or free shipping that the real margin could carry gets turned down. The break-even ad cost is set too low, so acquisition stops early. On a subscription, the first-order loss looks deeper and the payback longer than they are.

The size of the error is the reserve itself, so the categories with the highest return rates are misjudged the most. A consumable with a small reserve loses a point or two of margin to it. Apparel loses most of what it earns.

## What prevents it

In Offer Suite's forecast the [refund reserve](https://offersuite.io/glossary/refund-reserve) is one cost line among the others, a percent of revenue, and revenue is what the customer is charged. There is no net-revenue column for a second subtraction to start from.

Realized profit works the other way round and still counts refunds once. It [nets refunds when they happen](https://offersuite.io/glossary/refunded-revenue) and carries no reserve at all: the estimate belongs to the forecast, and the actual refund replaces it on the order.

A spreadsheet is still the right tool for some of this. Where it is, and where it stops: [Offer Suite vs a spreadsheet](https://offersuite.io/compare/spreadsheets).

## Where the numbers come from

The example is not a real brand's offer. Every input is sourced below, or marked there as an assumption.

|  |  |
| --- | --- |
| Price | $120.00, the average order. [FIGS, fourth quarter and full year 2025 results, read 23 September 2026](https://ir.wearfigs.com/news/news-details/2026/FIGS-Releases-Fourth-Quarter-and-Full-Year-2025-Financial-Results/default.aspx) |
| Unit cost | $40.20. [FIGS, fourth quarter and full year 2025 results, read 23 September 2026](https://ir.wearfigs.com/news/news-details/2026/FIGS-Releases-Fourth-Quarter-and-Full-Year-2025-Financial-Results/default.aspx) |
| Refund reserve | 19.3%, NRF's estimate of online sales returned in 2025, across all categories. [NRF and Happy Returns, 2025 Retail Returns Landscape (15 October 2025), read 23 September 2026](https://nrf.com/media-center/press-releases/consumers-expected-to-return-nearly-850-billion-in-merchandise-in-2025) |
| Pick and pack | $3.20 per order and $0.48 for each extra item. [Fulfill.com, 3PL pricing benchmarks (The Fulfillment Advisor 2025 survey of 600+ warehouses), read 23 September 2026](https://www.fulfill.com/3pl-pricing) |
| Shipping label | USPS Ground Advantage, commercial, Zone 5, by weight rounded up to the pound: 1 lb $9.29 · 2 lb $10.50 · 3 lb $12.12 · 4 lb $13.89 · 5 lb $14.53. Packed weight is an assumption: 2 lb per order. [USPS Notice 123, USPS Ground Advantage Commercial, Zone 5 (effective 4 October 2026), read 13 October 2026](https://pe.usps.com/text/dmm300/Notice123.htm) |
| Card fees | 2.9% + $0.30 per order: Shopify Payments' online rate for a standard card on the Basic plan in the United States. Higher plans pay a lower rate, and premium cards a higher one. [Shopify's pricing page for the United States, online standard card rates, read 12 October 2026](https://www.shopify.com/pricing) [Rates by plan and country](https://offersuite.io/fees/shopify-payments/united-states) |

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