There are a lot of articles teaching you how to calculate the refund rate of Clickbank products. There are even some web-based calculation tools and scripts to help you calculate the rate. We investigated many of them. They all seem to have some logical errors. If you use them, you may come up with some wrong refund rate leading to wrong business decision in promoting your next product (or miss promoting the good ones). Here, we’re going to show you the right way to do the calculation. Note that refund rate cannot be an absolute indicator of the refund situation, which is skewed if product price is changed, which is not uncommon as vendor test different pricing strategy to maximize earning.
In our downloadable Clickbank Marketplace CSV file, under the column of Refund Rate, if you see -1, it means either that the product payment nature is recurring or that there’s more than one product listed under the corresponding Vendor ID. These two situations prevent us from obtaining a meaningful result out of the Refund Rate calculation.
Now, let’s learn how to do the Refund Rate calculation properly (we’ve done all these tedious calculation for you in our downloadable Clickbank Marketplace CSV). You have to have to obtain the value of the follow parameters:
Product Price (by viewing the Clickbank payment page of the product, rely not on the landing page marketing tag lines);
$/sale (in Clickbank product search result); and
%/sale (in Clickbank product search result).
1. Clickbank takes 7.5% + 1 USD per transaction as their platform fee. For every payment paid through Clickbank, the vendor’s earning = Product Price – ( ( Product Price × 7.5% ) + 1 ); thus, Revenue after Platform Fee = Product Price × 0.925 - 1
2. Affiliate Commission = Revenue after Platform Fee × %/sale. The commission payable to affiliate is calculated based upon the Revenue After Platform Fee, not the Product Price.
3: Refund Difference = Affiliate Commission – $Earned/Sale
4: Refund Percentage = ( Refund Difference ÷ Affiliate Commission ) × 100
Let’s do a quick demonstration to illustrate the calculation with the following parameters:
Product Price = $47
$/sale = $19.86
%/sale = 50%
1: ($47 * 92.5%) -1 = $42.475 (Net Commission)
2: $42.475 x 50%) = $21.2375 (Affiliate Commission)
3: ($21.2375 – $19.86) = $1.3775 (Refund Difference)
4: ($1.3775 / $21.2375) = 6.49% (Refund Percentage)
As a result, the refund rate is 6.49%