Restocking Fee

A restocking fee is a charge a supplier applies when a customer cancels or materially changes an order after the supplier has already committed resources to it - ordered raw materials, scheduled production time, or started fabrication. The fee compensates the supplier for work already done and the commercial risk of holding or re-selling goods that may be custom or semi-finished.

For standard, off-the-shelf products, restocking fees are uncommon. For customized or bespoke orders - decorated promotional merchandise, furniture in non-standard finishes, custom-cut lighting fixtures, made-to-measure joinery - they are standard practice and should be expected.

How Restocking Fees Are Calculated

Standard restocking fees range from 15% to 25% of the order value (Priceva, 2025). For highly custom or bespoke items - furniture in non-standard finishes, embroidered garments already in production, custom-tooled products with no resale potential - fees of 30% to 50% are common.

The trigger point matters as much as the percentage. A cancellation before materials are ordered typically attracts no fee or a small administration charge. A cancellation after production has started results in a higher percentage, sometimes the full order value if the goods cannot be re-sold or re-purposed.

Partial cancellations - removing items from a multi-line order after some lines have already entered production - can attract fees on specific lines even if the overall order proceeds.

Protecting Your Business from Restocking Exposure

Businesses that use suppliers with restocking fee policies need to mirror those fees in their own customer terms. If a customer cancels a custom order after your supplier has already committed to production, you need a written right to pass that cost through - or absorb it yourself.

The standard approach is to include a restocking fee clause in the order confirmation at the point of customer sign-off. The clause should specify the fee percentage, the trigger event (for example: after production is authorized, or after blank goods are ordered), and that the fee applies regardless of reason for cancellation.

Capturing written customer approval of the order confirmation - including the restocking fee clause - before raising any supplier purchase order provides the clearest protection.