Recovery value should reflect the expected mix of actual disposition outcomes, not the best-case retail price of a returned unit.
Define value consistently
Choose inventory carrying value, net resale proceeds or another finance-approved basis and use it consistently. Retail price usually ignores original product cost, future selling expense and the chance the item will not return to full-price stock.
Document whether recovery is measured before or after refurbishment, marketplace fees and outbound fulfillment. Two teams can otherwise assign different values to the same unit.
Use a weighted disposition model
Group completed returns into full-price restock, markdown, refurbishment, liquidation, recycle and write-off. For each group, multiply net recovered value by outcome frequency and sum the results.
Example: a $60-cost item with a 60% chance of restock at $60, 25% markdown at $35, 10% liquidation at $8 and 5% write-off has expected recovery of $45.55: $36 + $8.75 + $0.80 + $0.
Segment condition drivers
Recovery varies by reason, transit time, packaging, season and warehouse. An unopened wrong-size item and damaged electronics should not share one rate. Start with high-volume products, then fall back to category data when samples are small.
Use a period long enough to capture final disposition. A unit waiting for inspection has not demonstrated recovery and should not be counted as fully restocked.
Run sensitivity ranges
Calculate conservative, expected and optimistic recovery. If the decision changes with a small adjustment, require review or more data. If all cases favor the same option, the decision is more robust.
Review estimates after packaging, refurbishment, liquidation-partner or product-lifecycle changes.
Put this guide into practice
- Choose one value basis.
- Use completed dispositions.
- Weight outcomes by frequency.
- Segment different products and reasons.
- Test recovery ranges.
Sources and further reading
External sources provide regulatory or industry context. Refund or Return independently prepares the framework and examples above.
Prepared by the Refund or Return Editorial Team under our editorial policy. This educational guide is not legal, tax or accounting advice.
Last reviewed: August 21, 2026