How to Create a Return Label (And Who Should Pay for Returns)

Updated July 2026. Rates and policies verified against carrier-published sources; see references at the end.

A return label is a prepaid shipping label with the addresses reversed: your customer is the sender and you are the recipient. The fastest way to create one is through shipping software — select the original order, click "create return label," and email the label to the customer or tuck it in the box. If you use scan-based (pay-on-use) return labels, you pay nothing until the carrier actually scans the package into its network, so an unused label costs you $0.

Prepaid vs. scan-based return labels

There are two ways to pay for a return label, and the difference matters more than most sellers realize.

• Prepaid labels are charged the moment you create them. If the customer never ships the return, that postage is spent until you request a refund for the unused label through your platform or the carrier.
• Scan-based (pay-on-use) labels are created for free and only charged when the carrier scans the package into the mailstream. You can hand them out generously — in confirmation emails, inside every box — without paying for returns that never happen. USPS runs this as its Scan-Based Payment program, and most shipping platforms expose it as the default return-label type.

How to create a return label in shipping software

Small sellers almost never generate return labels directly on carrier websites — business return services like USPS Merchant Returns are built for enterprise accounts. Shipping software does the same job in a few clicks:

1. Open the original order or shipment in your dashboard.
2. Choose "create return label." The platform flips the from/to addresses automatically.
3. Pick the return service — USPS Ground Advantage is the default choice for most parcels under 70 lbs.
4. Choose prepaid or scan-based payment.
5. Email the label (or a QR code) to the customer, or print it and include it in the outbound box.

Through Ship.com, return labels get the same discounts as outbound labels — up to 89% off USPS retail rates and up to 82% off UPS retail rates — so a return usually costs you far less than what the customer would pay at a retail counter. See how the discounts work on our USPS and UPS rates page.

USPS return options

• USPS Ground Advantage Return and Priority Mail Return: the standard merchant return services, generated through shipping platforms or USPS business tools. Ground Advantage covers packages up to 70 lbs and includes tracking.
• Label Broker: if your customer has no printer, send them a Label Broker ID (a QR code). They show it at a Post Office and USPS prints the label there.
• USPS Label Delivery Service: USPS prints a physical label and mails it to your customer for $1.65 per label — useful for customers who cannot handle a QR code or a PDF.

UPS return options

• Print Return Label: you print the label and send it with the outbound shipment or by email.
• Electronic Return Label: UPS emails your customer a link to print the label themselves.
• Print and Mail Return Label: UPS prints the label and mails it to the customer's address.
• UPS Returns Plus: a UPS driver brings the return label to the customer and picks up the package, with up to three pickup attempts.

UPS charges a small per-label service fee for each of these options on top of the return postage; the fee varies by option, so check current rates in your platform before choosing.

Who should pay for return shipping?

Free returns are a marketing cost, not a shipping cost — so decide with numbers, not habit. Say you ship 100 orders a month, 8 of them come back, and a discounted Ground Advantage return label averages $7. That is $56 a month, or $0.56 per order. If offering free returns lifts your conversion rate or repeat-purchase rate by even a point or two, it usually pays for itself; if your return rate is 20% on heavy items, it will not.

Free returns tend to make sense when:

• Your return rate is low (under roughly 10%) and your margins comfortably absorb $0.50–$1.00 per order.
• You sell in a category where buyers expect free returns (apparel, shoes, accessories) and competitors offer them.
• Repeat customers drive your business — a paid-return experience is a common reason buyers do not come back.

Customer-paid returns tend to make sense when:

• Items are heavy, oversized, or low-margin, so a single return can erase the profit on several orders.
• You sell one-off or clearance items where repeat purchase is unlikely.
• You want a mild brake on casual returns — a scan-based label with a deducted-from-refund fee is a common middle ground.

Whichever you choose, use scan-based labels so the label itself never costs you anything until it is used, and watch tracking so you know when a return is inbound. If a return bounces or stalls, our guide to packages returned to sender covers what to do next, and if the item arrives back damaged, see what to do when a package is damaged in transit.

Frequently asked questions

Can my customer get a return label without a printer?

Yes. For USPS, send a Label Broker QR code and any Post Office will print the label. For UPS, customers can bring a mobile barcode to The UPS Store or a UPS Customer Center. You can also have either carrier print and mail a physical label for a small fee (USPS charges $1.65 through its Label Delivery Service).

Is a return label the same as a regular shipping label?

Functionally yes — it is a normal label with the addresses reversed. The difference is how it is paid for (prepaid vs. scan-based) and that carriers offer dedicated return services with their own rates and rules.

What happens if a customer never uses the return label?

With a scan-based label, nothing — you are never charged. With a prepaid label, request a refund for the unused label through your platform; carriers allow refunds on unused postage within a limited window, so do not sit on it.

Do I have to refund the customer's original shipping cost too?

That is your policy call, not a carrier rule. Most small sellers refund the item price and refund original shipping only when the return is due to their own error (wrong or defective item).

Ship cheaper starting today

Ship.com gives small sellers up to 89% off USPS and up to 82% off UPS retail rates, with plans starting at $4.99/month — and return labels get the same discounts as outbound ones. Free trial: use Ship.com free for your first two shipments — pay only the postage, no subscription fee, no credit card required. See plans and pricing.

References

• USPS Customer Returns — Label Services and Package Return Options — verifies USPS merchant return services and scan-based payment (accessed July 2026).
• USPS Label Broker — verifies printer-free label pickup with a QR code at Post Offices (accessed July 2026).
• USPS Insurance & Extra Services — verifies the $1.65 USPS Label Delivery Service fee (accessed July 2026).
• UPS Customer Return Services — verifies UPS return label options, including Electronic Return Label and Returns Plus with three pickup attempts (accessed July 2026).