COD/RTO guide

Calculate COD profit after failed deliveries and RTO cost.

COD campaigns can look profitable before failed delivery costs are counted. This guide explains the inputs that matter before scaling a cash-on-delivery offer.

What this means

COD profit depends on more than placed orders. Confirmation rate, delivery rate, RTO shipping, COD fees, product cost, packaging, and CPA can all change whether each placed order leaves profit.

Formula

deliveredOrders = placedOrders * confirmationRate * deliveryRate
netProfit = deliveredContribution - rtoLoss - adSpend

The exact formula depends on courier rules and product condition after return. Review whether your business loses only shipping/packaging on RTO or also loses product cost.

Example

If 100 COD orders are placed but only 70 are delivered, your profit must absorb the failed delivery cost from the other orders. A CPA that looks safe on delivered orders may be too high when measured across all placed COD orders.

Common mistakes

  • Counting placed orders as delivered revenue.
  • Ignoring RTO forward or return shipping charges.
  • Using ROAS when CPA per placed COD order is easier to control.
  • Scaling ads before checking confirmation quality.

How to improve this number

  • Improve confirmation quality before increasing ad budget.
  • Reduce courier and RTO shipping pressure where possible.
  • Compare CPA against break-even CPA per placed order.
  • Review product price, bundles, and COD fee assumptions.

Calculator

Use the COD/RTO calculator to model confirmation rate, delivery rate, RTO shipping, COD fees, product cost, and CPA with your own assumptions.

Calculate COD/RTO profit