Refund Rate
The share of billed revenue you hand back — a direct measure of post-sale friction.
What is it?
Refund Rate is the value of refunds and credit memos as a share of your gross billings — the portion of billed revenue you hand back. It is a direct measure of post-sale friction: dissatisfaction, billing errors and buyer's remorse all show up here.
A low, steady rate is routine; a climbing one is a symptom worth chasing to its source. Because refunds reverse revenue you already booked, a rising refund rate quietly erodes net revenue even when gross billings look healthy.
How to calculate?
Divide the total value of refunds and credit memos in the period by gross billings for the same period. Two percent means two cents of every billed dollar came back. Decide whether partial refunds and credits both count, and apply it consistently.
Segment by reason and cohort: a spike concentrated in one plan or one month usually points at a specific cause — a botched release, a pricing change — that a blended rate would bury.