What is the refund allowance?

The Refund Allowance is a running 30-day average of all refunds in the last month divided by the number of orders during that same time period. This balanced and accurate daily value is applied to the gross profit results of the selected time period. Application of the Refund Allowance as opposed to Total Refunds to the gross profit is advantageous in that it distributes the refunds proportionally across a 30-day period instead of concentrating them on the days that the seller just so happened to have issued the refunds.

In order to avoid this distortion, MarginDriver calculates and applies the Refund Allowance using a running 30-day average and applying the allowance proportionally according to the number of orders placed that day.

MarginDriver calculates a new Refund Allowance each day by referencing the total amount of revenue refunded in the last 30 days on that sales channel and dividing by the number of orders month-to-date to arrive at the average dollar amount refunded per order over the past 30 days. This value is then multiplied by the number of orders for the current day to arrive at an estimated refund allowance for the current day.

The Refund Allowance is applied to summary results (daily, weekly, monthly, etc.) on the Order Detail and Order Summary pages. It is NOT applied to the invidual orders displayed on those page. So the gross profit and margin results for any given order are calculated independently and with no impact from refunds

Calculating Refund Allowance

Explanation of the Calculating Refund Allowance table found on the Refund Analytics page

Daily Actual Orders: the number of orders on that day of the month for the selected sales channel

MTD Accumulated Orders: the total number of MTD accumulated orders for that day of the month

30-Day Accumulated Orders: the total number of orders for the previous 30 days

Daily Actual Refunds: the dollar amount of refunds actually issued that day

MTD Accumulated Actual Refunds: the dollar amount of accumulated MTD refunds

30-Day Accumulated Actual Refunds: the dollar amount of accumulated refunds from the previous 30 days

30-Day Accumulated Refund Allowance Per Order: the 30-Day Accumulated Actual Refunds divided by the 30-Day Accumulated Orders. The result is the average amount of refunded money per order over the previous 30 days. This value is multiplied by the number of orders for the current day to arrive at an estimated refund allowance for the current day.

MTD Refund Allowance Per Order: equal to the most recent daily 30-Day Accumulated Refund Allowance Per Order. As the 30-Day Accumulated Refund Allowance Per Order is calculated on a daily basis, the value becomes the new average refund allowance per for order for every day of the current month as it constitutes the most accurate and up-to-date estimate of what the final refund allowance per order will be at the end of the current month.

Daily Refund Allowance: MTD Refund Allowance Per Order multiplied by the number of orders for that day

MTD Accumulated Refund Allowance: the accumulation of the refund allowance for each day of the current month. On the last day of each month, this value will equal the total dollar amount of actual refunds issued for the month.

Article Categories