Example: If 500 orders were placed in a month and 20 were refunded, the refund rate is 4%.
Why Refund Rate matters
Refunds reduce revenue and often point to a deeper problem such as unclear expectations, product issues, billing errors or poor fit. Tracking the rate helps you spot those problems before they grow.
It also affects other numbers. Revenue, average order value and return on ad spend look better than they really are if refunds are not taken out.
How to read it
Lower is better, but the normal level depends on your product, price and refund policy. Compare against your own history and by product, plan and acquisition channel.
Keep refunds separate from disputes or chargebacks, which are customer-initiated payment reversals through the card issuer and need their own tracking.
How to improve it
- Set clear expectations on the sales page about what customers get.
- Improve onboarding so new customers reach value early.
- Review refund reasons regularly and fix the most common ones.
- Fix billing and checkout issues that cause accidental charges.
- Check which channels or offers bring customers who refund more often.
Common mistakes
- Reporting revenue without removing refunds.
- Mixing up refunds and chargebacks.
- Mixing the order-based rate with the amount-based rate.
- Ignoring differences between products, plans and channels.
“What was my refund rate by month this year, and which products or plans have the highest refunds?”
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