Returns

What is a restocking fee, is it legal, and how should you set one?

A restocking fee is a charge, often 10-20% of the item price, deducted from a refund to cover inspecting, repackaging and reselling a returned item. It is usually lawful for change-of-mind returns when clearly disclosed before purchase, but not for faulty items, and not on standard 14-day withdrawals in the EU and UK.

By Saara Editorial Team · Updated

Direct answer

A restocking fee is the part of a refund a merchant keeps when an item comes back. It pays for the real costs of a return: receiving, inspecting, cleaning, repackaging and putting the item back on sale, or the loss when it can only be sold at a discount. Merchants typically charge it as a percentage of the item price, use it only for change-of-mind returns, and state it in the return policy before the customer buys.

Where restocking fees are allowed

Rules depend on where the customer is, not where your business is. This is a general summary, not legal advice; check the rules in each market you sell to.

How to set a restocking fee, step by step

Treat the fee as a cost-recovery tool, not a profit line. A fee that feels punitive costs repeat purchases.

  • Step 1 - Work out your real cost per return: handling labour, inspection, repackaging and the average markdown on returned stock.
  • Step 2 - Pick where it applies: change-of-mind returns only, specific categories (electronics, furniture, custom or bulky items) or opened items. Never apply it to faulty, damaged or wrong items.
  • Step 3 - Choose the amount: a percentage (commonly 10-20%) or a flat fee for low-value items. Keep it at or below your real cost.
  • Step 4 - Offer a way to avoid it: waive the fee for exchanges or store credit, so customers keep the revenue with you instead.
  • Step 5 - Disclose it clearly: on the return policy page, product pages for affected items, checkout and the order confirmation.
  • Step 6 - Set market rules: switch the fee off for EU and UK customers within the withdrawal period, and for any market where it is restricted.
  • Step 7 - Automate and review: apply the fee through your returns software so every return is treated the same, then review return rate and repeat purchases after 60-90 days.

Worked examples

How the fee changes the refund in common cases.

  • Unopened headphones, $200, 15% fee on opened electronics only: no fee, refund $200.
  • Opened headphones, $200, 15% fee: refund $170 ($200 minus $30).
  • Same return, customer picks store credit or an exchange instead: fee waived, $200 credit.
  • Discounted item: a $100 jacket bought for $80 with a 20% discount, 10% fee: charge the fee on the $80 actually paid, so refund $72, not $70.
  • Faulty blender, any market: no fee, full refund or replacement.
  • EU customer cancelling within 14 days: no fee; you may deduct only a documented loss in value from excess handling.

Restocking fees in Shopify and EcoReturns

Shopify's return rules let merchants add a restocking fee to returns created for fulfilled orders, and the fee is calculated per item when the return is processed. EcoReturns adds rule-based control on top: fees by collection, SKU, country or return reason, automatic waivers for exchanges and store credit, and a refund calculation the customer sees in the return portal before they submit.

Frequently asked questions

How much is a typical restocking fee?

Most merchants who charge one use 10-20% of the item price, or a small flat fee for low-value items. The fee should not exceed your real cost of processing the return.

Can I charge a restocking fee on a faulty item?

No. Faulty, damaged or wrong items should be refunded, repaired or replaced without a fee in every major market.

Can I charge a restocking fee to EU customers?

Not as a flat fee during the 14-day right of withdrawal. You can ask them to pay direct return shipping if you told them in advance, and deduct a documented loss in value caused by handling beyond what was needed to check the item.

Should the fee apply to exchanges?

Usually not. Waiving the fee for exchanges and store credit keeps revenue in your store and makes the fee feel fair.

Do I charge the fee on the full price or the discounted price?

On the amount the customer actually paid for the item after discounts. See our partial refunds guide for discount allocation.

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