How to Calculate Your Net Dollar Recovery From Chargebacks

Introduction

Many businesses treat chargebacks as an unavoidable cost and operational nuisance to either manually tackle with internal resources, outsource, or somehow resolve using software.

But taking a reactive, tactics-led approach ignores fundamental strategic questions: 

• How much of your disputed revenue is actually recoverable, and 
• What are chargebacks really costing your business? 

If you’re not answering these two questions, chances are you’re leaving money on the table, both in terms of lost revenue and misallocated resources. You may also have a data collection issue (see how it can be resolved by unifying all chargeback data in one place). You may also be missing learnings from chargeback data that can drive operational improvements to your business.

Measuring the success of your chargeback dispute program

How can you tell how successful your chargeback management efforts really are? Some merchants focus on win rates, but this approach ignores the cost of the operation to run your chargeback recovery efforts. We propose a better way to measure the success of your chargeback efforts: Net Dollar Recovery (NDR), which takes the costs of your chargeback dispute program into account. This document will explain how to measure Net Dollar Recovery and how to use it to tell if your chargeback dispute efforts are delivering the results you need.

Aren’t win rates enough?

Most chargeback solutions use win rates to prove their usefulness. It sounds right: you’ve disputed a chargeback–and you won it. Isn’t that all there is to it? Yet, viewed in isolation, win rates can be deeply misleading, for two reasons:

• Are win rates actually a function of the chargebacks you’ve actually disputed, which may be low hanging fruits? Are these win rates reflective of the entirety of chargebacks worth disputing?
• Does your win rate mean much if it overlooks the cost of managing chargebacks?

A 40% win rate sounds impressive, until you realize it’s based on cherry-picked, easy-to-win cases, limited to an arbitrarily defined “worth-the-effort” dollar range. What if your team is ignoring thousands of smaller disputes because they don’t have the bandwidth (or automation) to fight them? Would having wins there deliver more dollars to your bottom line? And what about the labor costs dedicated to achieving those wins? If they are high, the effort may not return as much as you believe.

We’ve seen many teams focus only on a certain segment of chargebacks that are winnable or don’t create much overhead, but this ignores the question of whether the remaining chargebacks can and should be disputed (they usually should) and the impact of that on the bottom line. At Justt, we’ve also seen merchants avoid or miss chargebacks that require a lot of data collection about the customer or have certain reason codes.

The questions that actually matter are:

• How much revenue are you actually recovering?
• What’s your all-in cost to recover it?
• How much more could be recovered with the same (or less) effort?

Net Dollar Recovery focuses on the revenue recovered and the costs to get it, not on superficial or misleading KPIs that mask underlying inefficiencies. Speaking of which, chargeback inefficiencies can stem from:

• The labor costs associated with disputing chargebacks
• An inability to scale disputes when chargeback volumes grow—due to labor constraints, data issues, or a plain inability to deal with certain classes of chargebacks
• Fixed costs per chargeback (for tools, or related to fees)
• Fees associated with losing a dispute (if and when those apply)

To ensure you’re actually picking the right strategy, we recommend you calculate net dollar recovery since it will help you make better choices, especially when there are fees tied to losses or concerns around incremental labor for submissions. 

Using NDR can help make decisions about what to dispute and what not. By tracking the total amount of disputed revenue you retain after accounting for internal labor, platform fees, fees incurred for losses (such as the recent Stripe announcement), and alert-driven refunds, it’s the clearest way to measure whether your chargeback operation is actually performing. It also helps you develop the criteria you need to determine the minimum chargeback value worth disputing, and how to handle fines and other fees. 

Determining Your Net Dollar Recovery

To accurately determine your NDR, you’ll need data across several key categories:

Chargeback Volume

• Total dollar value of your CBKs / Disputes
• Number of chargeback cases

Percent of Chargebacks Disputed

• How many disputes did you actually submit?

Dispute Win Rate Performance

• Recovery rate (percentage of disputed chargebacks successfully resolved in your favor)

Internal Handling Costs

• Staff hours dedicated to chargebacks
• Average fully-loaded salary

Additional Fees

• Fees for late submissions (a dollar amount times the disputes for which this applies)
• Fees for lost disputes.

External costs

• Platform/vendor fees
• Example: Success-based platform fee of x%.

Justt has built a convenient calculator you can download to model your own chargeback program, whether you’re benchmarking current performance, estimating ROI from automation, or building a business case for change. Do note that the calculation assumes an average chargeback value – when you run the full calculation we suggest segmenting chargebacks by dollar amount to determine the size of chargebacks that should be disputed. The same logic can apply to segmenting chargebacks by reason codes, data enrichment and more – this is probably the point where a chargeback automation system can help.

You can download the calculator here. 

Don’t Forget to Include the Cost of Alerts, If You Use Them

Many (not all) merchants use alerts to avoid chargebacks that would otherwise push them above network thresholds. Each alert typically costs $20 to $40, and it often triggers a full refund. 

It’s important to separate cost-saving tools (like alerts) from revenue-recovery tools (like chargeback automation). Remember that when alerts are overused or applied indiscriminately, they can quickly erode margin and distort performance metrics. Make sure to account for those when calculating Net Dollar Recovery.

The Real Cost of An Under-Optimized Chargeback Program

Let’s analyze a typical merchant’s chargeback program using the example data above:

For a company that has assigned a team of two to dispute 50% of chargebacks with an 18% win rate, the majority of disputes are lost, either because they were never contested or were unsuccessfully challenged. At an $80 average transaction value, the breakdown looks like this:

This example demonstrates how a low win rate can essentially wipe out recovered revenue due to the dispute fees incurred.

Now imagine the merchant doubles its team to 4 employees to have the capacity to dispute 100% of chargebacks. Maintaining the same 18% win rate, here’s how that looks:

Adding more employees to manually dispute 100% of chargebacks didn’t improve outcomes in this scenario. Instead, it highlights the hidden costs of scaling a manual chargeback program, where results are expensive, and reinforces the need for an automated, adaptive dispute strategy.

Better Results Through Automation

Most merchants only recover a fraction of disputed revenue–not because the cases are unwinnable, but because their current process makes winning at scale impossible. Manual teams prioritize large disputes, use static templates, and rarely test new strategies. That leaves high volumes of smaller chargebacks untouched, and larger ones often under-optimized.

When a merchant switches to an automated, smart solution like Justt, two fundamental shifts occur:

1. Scale Without Compromise

Every winnable chargeback is fought, regardless of dollar value, because automation reduces the marginal cost of generating high-quality responses to near zero.

In most cases, we recommend fighting 100% of disputes, since automation allows you to submit more disputes. In case of fees that apply for lost disputes, we suggest another approach, supported by our dispute optimization capability which applies the logic of the likelihood of a positive ROI to determine which chargebacks should be fought and which should not be.

2. Quality at Every Level

Justt doesn’t rely on static one-size-fits-all templates. Instead, each dispute is dynamically assembled using arguments that have been tested and proven across tens of millions of cases. Evidence is enriched using third-party data, structured based on the specific issuer and reason code, and continuously optimized using live A/B testing. 

In our example, improving the win rate from 18% to 40%, while requiring less labor to do so, gives net dollar recovery a major boost:

In this scenario, the company increased recovered revenue from $117,000 to $260,000, but it also reduced total direct costs from $220,563 to $133,750. 

With fewer lost disputes, penalty fees also dropped, from $99,938 to $73,125.

Internally, a single employee spending only half their time on chargeback disputes handled the same volume that previously required two full-time staff.

And with higher-quality cases and automated workflows from Justt, there’s now potential for those same two to handle even more. Tasks like parsing PDFs, formatting evidence, and maintaining spreadsheets are now automated, freeing up over 9,000 hours annually, valued at $180,000 in team capacity.

But the more important shift is operational: recovery becomes predictable, scalable, and trackable. Chargebacks transition from a cost center to a measurable revenue function.

The 4 Levers That Drive Net Dollar Recovery

To maximize your NDR, focus on these four critical levers:

1. The Percentage of Chargebacks Disputed

The more chargebacks you dispute, the more revenue you can recover. If you’re currently focusing solely on chargebacks within a narrow “high-value” band, you’re leaving significant money on the table. Expanding your dispute coverage (even for small-dollar cases) can unlock material gains.

2. Dispute Success Rate

Raising your win rate undoubtedly unlocks more revenue, but simply doing more of the same manual work won’t materially improve NDR. Three critical elements are required:

• Better inputs: Each dispute response needs to be tailored to a variety of factors and a modular set of arguments related to the issuing bank, card scheme, transaction type, and reason code. Solutions like Justt can enrich every submission with third-party data as well (e.g., IP address matching, shipping confirmation, email age, AVS and CVV results), automatically selected based on historical issuer behavior.
• Better targeting: Continually refine your submissions based on what works for each issuer and use live A/B testing. That will help you not just with which arguments to include, but in what order, at what level of emphasis, and under what conditions to omit them entirely.
• Better representments: Instead of filling out generic templates, each case is custom-prepared using dynamic logic, pulling from a library of proven arguments and evidence to generate responses that are not only complete, but also issuer-specific.

3. Efficiency of Execution

Reducing internal labor and cycle time allows your team to scale without additional headcount. Automation delivers this efficiency and enables coverage of lower-value cases that might otherwise be ignored due to resource constraints.

With recent changes that penalize submission delays, it’s good to use automation since it will reduce fees. 

4. Cost Structure

Most chargeback operations function as sunk cost centers. Salaries, tools, and indirect effort are expended whether disputes are won or lost. Even many third-party vendors charge monthly minimums or per-case fees regardless of outcome.

Using a platform that charges only on successfully recovered funds ensures perfect alignment of incentives and caps your downside risk.

Taking Action: What to do next

Run the numbers! Use this framework with your own inputs to calculate your net dollar recovery. How many disputes do you handle? What are you recovering today? What does it cost your team to do that work? 

Then map what happens if win rate increases, headcount requirements drops, and more of your disputed revenue is retained. In the process, you’ll discover areas for improvement, from quick wins to long-term strategic opportunities.

Once you’re comfortable measuring NDR, it’s important to set goals. Net dollar recovery gives you a single, comprehensive metric to evaluate program performance, compare vendors, and set goals. If you’re not calculating it, you’re likely not optimizing it.

Finally, consider automation solutions, which can both increase the number of chargebacks you can dispute with the same resources and improve the quality and likelihood of success of those disputes.

Net dollar recovery changes the way merchants think about chargebacks, from an unavoidable cost to a recoverable revenue stream. By focusing on this holistic metric, you’ll make better decisions about resource allocation, technology investments, and ultimately improve your bottom line.

Want to see how Justt can improve your Net Dollar Recovery? Download the calculator or request a demo.