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COD vs prepaid profit calculator
COD looks like more orders. Once return-to-origin is priced in it is often the least profitable thing you run. This puts a number on it.
Set from your location. The maths is the same in any currency — only the labels change.
A flat courier charge, typically ₹20–40.
Ask your courier for your own figure.
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Why RTO costs more than it looks
A returned order is not a neutral event. You paid to ship it out, you pay to ship it back, the packaging is wasted, the unit may not be resellable, and your working capital sat in transit for a fortnight. This charges shipping twice on every RTO, which is the minimum honest treatment — it does not count handling time, support messages or courier reconciliation, so the real gap is wider.
Cutting RTO without killing COD
- Verify before dispatch. An automated WhatsApp confirmation removes a real share of impulse COD orders that were never going to be accepted.
- Charge a token COD fee. Even ₹30 changes who picks it.
- Cap COD by pincode. Your courier can tell you which pincodes return worst; most brands have a handful doing real damage.
- Cap COD above a value. High-ticket COD is where losses concentrate.
- Block repeat RTO customers from COD entirely.
What a prepaid discount actually buys
It is not a marketing cost, it is an insurance premium against RTO. If COD returns at 28% and prepaid at 4%, you are buying out a 24-point risk. Whether 5% is a fair price depends on your margin, which is why the calculator asks.
Feed the result into the break-even ROAS calculator — a brand running heavy COD needs a materially higher ROAS for the same profit.
Questions
What RTO rate should I assume?+
Do not assume. Ask your courier for your own last-90-days figure split by payment method. COD rates vary enormously by category and price point.
Should I just switch COD off?+
Rarely. In many categories it is most of the demand, and removing it cuts orders faster than losses. Reduce it selectively by pincode, value and customer history.
Does this include advertising?+
No. This is unit economics before ads, so the profit figure is what is available to pay for them.
Why is prepaid RTO not zero?+
Refusals, wrong addresses and failed deliveries still happen. Four per cent is a starting assumption — replace it with your own.
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