Does the reserve net out resale or refurbishment recovery?

No. It holds the full landed cost of every expected return. If returned units can be restocked and resold, the effective loss is lower than the reserve, and that recovery is tracked separately.

Why use landed cost rather than retail price?

Because the reserve covers what the item cost to land in the warehouse, not what it sells for. Freight, duty and handling are already in the landed cost, so returned units are reserved at what they would cost to replace.

What makes the return rate move?

Season, packaging quality, product defects and the returns policy all move it. A rate from one season is a weak guide for the next, so review the program average before setting the reserve.

Is the setup cost charged per returned unit?

No. It is a fixed cost of running the returns process and is charged once to the program. Only the variable reserve changes with the return rate.

Toys, Sporting Goods & Recreational Products calculator

Returns Reserve Calculator

Reserve the landed cost of the units a program expects back, plus the fixed cost of running returns. Shipments, landed cost, return rate and setup go in, and the reserve spreads across every unit shipped.

What this calculator does

Dollars to reserve for returns across a shipped program, the reserve per unit shipped and the expected returned units.

Formula used

Total returns reserve = units shipped × landed cost per item × expected return rate ÷ 100 + reverse logistics setup cost
Reserve per unit shipped = total returns reserve ÷ units shipped
Variable reserve = units shipped × landed cost per item × expected return rate ÷ 100
Expected returned units = units shipped × expected return rate ÷ 100

Inputs explained

Units Shipped This Program: Units shipped under this returns program, from the shipment record.
Landed Cost per Item: Unit cost landed in the warehouse, after freight and duty.
Expected Return Rate: Share of shipped units you expect to come back.
Reverse Logistics Setup Cost: Fixed cost of standing up the returns process.

How to use the result

Best suited to budgeting a seasonal returns reserve, comparing return rates across programs, setting a returns accrual per unit.
Recovery from resale or refurbishment of returned units is not netted against the reserve. The setup cost is charged once to the program and does not repeat.

Common questions

Does the reserve net out resale or refurbishment recovery? No. It holds the full landed cost of every expected return. If returned units can be restocked and resold, the effective loss is lower than the reserve, and that recovery is tracked separately.
Why use landed cost rather than retail price? Because the reserve covers what the item cost to land in the warehouse, not what it sells for. Freight, duty and handling are already in the landed cost, so returned units are reserved at what they would cost to replace.
What makes the return rate move? Season, packaging quality, product defects and the returns policy all move it. A rate from one season is a weak guide for the next, so review the program average before setting the reserve.
Is the setup cost charged per returned unit? No. It is a fixed cost of running the returns process and is charged once to the program. Only the variable reserve changes with the return rate.

Last reviewed 2026-10-01.