This COD / RTO profit calculator estimates expected profit from cash-on-delivery orders after accounting for delivery success, failed deliveries, return-to-origin costs, shipping, COD collection fees, advertising and product cost.
How it works
Each submitted order is weighted by the successful delivery rate. Revenue, product cost and COD collection fees are recognized on delivered orders, while forward shipping, handling and advertising are incurred for every submitted order. RTO cost is weighted by the failed-delivery rate.
The formula
RTO means return to origin: an order that was shipped but not successfully delivered and is returned through the logistics network. The model assumes returned inventory is reusable; expected loss or damage can be included in the RTO cost.
Worked example
With the default values and a 75% successful delivery rate, expected collected revenue is 112.50 per submitted order, RTO rate is 25%, maximum break-even CPA is 43.50 and expected profit is 28.50 per submitted order.
This is a planning model. Courier billing, COD settlement fees, reattempts, damaged returns, taxes and cancellation behavior differ between merchants and logistics providers.
Frequently asked questions
Why is product cost weighted by the delivery rate?
The model assumes an undelivered COD order returns to inventory and can be sold again. If some returned products are lost, damaged or non-recoverable, include that expected loss in the RTO cost.
What is maximum CPA in this calculator?
It is the maximum advertising cost per submitted order before expected contribution profit reaches zero under the entered delivery and cost assumptions.