Introduction

This guide explains how to manage return shipping costs and customer charges in your return management system. Understanding these components will help you set up fair and transparent return policies.

Access this feature

Navigate to /settings/policies in your application.

Types of Shipping Costs

Understanding the 5 Types of Shipping Costs

There are 5 types of shipping costs that affect the final refund amount:

Shipping fee: Original order shipping fee
Label generation fee: Fee for creating and processing the return label
Return fee: Fee charged to customers for processing their return, customizable based on return reason
Refund Discount: Deduction from the refund amount based on discounts applied to the original order in Shopify
Refund Taxes: Amount of tax to be refunded from the original order, as calculated by Shopify

5 Types of Shipping Costs

Diagram showing the 5 types of shipping costs and how they affect refunds

How Refund Amount is Calculated

The system will recalculate the total refund amount based on the following formula:

1Order subtotal + Taxes + Shipping fee + Label fee – Return fee – Discount

Refund Calculation Formula

Visual representation of refund calculation formula

Default Values

When setting up your return system, the following default values are applied:

Shipping fee: $0.00
Label generation fee: $0.00

Default Fee Values

Screenshot showing default fee values in the system

Editing Shipping Fee

How to Edit Shipping Fee

The shipping fee can be adjusted for each return request with specific limits based on the original order.

1Click the pencil (✏️) icon next to the shipping fee
2Enter the desired amount
3Note: Maximum allowed amount = Original order's shipping fee
4System shows "Max: $X" as reference
5Example: If original shipping fee was $3,969, you can enter any amount from $0 to $3,969
6Cannot exceed the original shipping fee amount
7Save your changes

Edit Shipping Fee

Screenshot showing shipping fee edit interface with pencil icon and maximum limit

Editing Label Generation Fee

How to Edit Label Generation Fee

The label generation fee can be customized per return request without maximum limits.

1Click the pencil (✏️) icon next to the label generation fee
2Enter the desired amount
3Note: No maximum limit for label generation fee
4You can set any amount based on your actual label costs
5Save your changes

Edit Label Generation Fee

Screenshot showing label generation fee edit interface with pencil icon

Setting Up Return Fees

Configure Return Fees by Reason

Return fees can be customized based on different return reasons to reflect varying processing costs.

1Go to "Settings" > "Return/ Exchange flow" > "Fee"
2Set up return fees, potentially varying based on return reasons
3Enter fee amounts for each return reason (e.g., "Changed Mind", "Defective Item", "Wrong Size")
4You can set different fees for different reasons to reflect your return policy
5Save your changes

Configure Return Fees

Screenshot showing Settings > Return/Exchange flow > Fee configuration page with return reasons

Return Fee Strategy Examples

Consider these strategies when setting up return fees based on return reasons:

Changed Mind: Higher fee (e.g., $5-10) since it's customer preference
Defective Item: $0 fee since it's a product issue
Wrong Size: Lower fee (e.g., $3-5) for honest sizing issues
Wrong Item Received: $0 fee since it's a fulfillment error
Not as Described: $0 fee since it's a merchant responsibility

Return Fee Examples

Table showing example return fees for different return reasons

Key Features

Flexible Fee Structure

Customize shipping fees, label fees, and return fees based on your business needs

Reason-Based Return Fees

Set different return fees based on return reasons to reflect varying processing costs

Automatic Refund Calculation

System automatically calculates final refund amount based on all fee components

Maximum Limit Protection

Shipping fee cannot exceed the original order shipping amount

Shopify Integration

Automatically pulls discount and tax information from original Shopify orders

Transparent Pricing

Clear breakdown of all fees shown to both merchants and customers

Important Notes

Set Competitive Return Fees

Research competitor return fees and set competitive rates. Consider offering free returns for defective items to build customer trust.

Communicate Fees Clearly

Always communicate return fees clearly in your return policy so customers understand costs before initiating a return.

Adjust Label Fees Regularly

Review and adjust label generation fees regularly to match actual carrier costs and avoid losing money on returns.

Respect Maximum Limits

You cannot charge more for shipping than the customer originally paid. The system enforces this limit to prevent overcharging.

Use Reason-Based Fees Strategically

Charge higher fees for discretionary returns (e.g., "Changed Mind") and lower or no fees for issues caused by the merchant.

Consider Customer Experience

While fees help cover costs, excessive fees may discourage purchases. Balance profitability with customer satisfaction.

Manage return shipping costs & customer charges