Business & tax

COD and RTO order profit calculator

Model kept deliveries, return-to-origin orders and customer returns separately, with recoverable stock, reverse shipping and a profit sensitivity graph.

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RTO is measured against all placed orders. Post-delivery returns are measured only among delivered orders. Weight each mutually exclusive outcome by its probability, charge common attempt costs once and retain sale revenue only for kept orders.

Worked example comparison
ExampleOutputWhat to notice
Worked exampleExpected profit per placed order₹201.20With the illustrated ₹1,000 sale and entered cost assumptions, 100 placed orders imply 72 kept deliveries, 20 RTOs and 8 customer returns. Expected net profit is ₹201.20 per placed order, or ₹20,120 for the cohort.
No RTOExpected profit per placed order₹314.00Every order reaches delivery, though the entered post-delivery return share remains.
All orders RTOExpected profit per placed order-₹250.00No kept revenue or delivered COD fee remains; attempt costs and RTO losses still occur.

Check your understanding

Is the customer-return percentage a share of all orders?

No. It is conditional on delivered orders; RTO is a share of all placed orders.

Does recovered stock count as sale cash?

No. It reduces modeled lost product cost; future resale is outside this cohort calculation.

Behind the numbers

How this calculation works

RTO is measured against all placed orders. Post-delivery returns are measured only among delivered orders. Weight each mutually exclusive outcome by its probability, charge common attempt costs once and retain sale revenue only for kept orders.

THE FORMULAExpected profit = Σ(outcome probability × contribution per outcome) − fixed cohort cost / placed orders

A worked example

With the illustrated ₹1,000 sale and entered cost assumptions, 100 placed orders imply 72 kept deliveries, 20 RTOs and 8 customer returns. Expected net profit is ₹201.20 per placed order, or ₹20,120 for the cohort.

Good to know

Entered scenario, not a platform forecast. COD fees stay payable on delivered returns. Recovery refers to product cost, not cash refunded. Taxes, fee credits, exchanges, retries and future resale are excluded.

Partition orders before counting money

RTO describes an order that never becomes a completed delivery. A customer return happens after delivery. If the RTO share is 20% and customer returns are 10% of delivered orders, the return probability across all placed orders is 8%, not 10%.

The remaining 72% are delivered and kept. Those three branches sum to 100%. Applying both failure percentages directly to all orders would double count some losses and understate the number of kept deliveries.

Follow the cost through each branch

Forward shipping, packing and acquisition costs can arise even when the order earns no retained sale revenue. Reverse transport costs are entered separately because an RTO and a delivered return may have different charges.

Recovered stock is not sale revenue. The recovery inputs describe the recoverable share of original product cost; the model charges only the unrecovered portion on the relevant failure branch. A later resale is a separate transaction.

Inspect a threshold rather than one optimistic average

The RTO sensitivity line holds customer-return behavior and all costs fixed. A crossing marks the entered scenario’s zero-profit RTO rate. It does not establish a carrier’s future performance or an acceptable industry benchmark.

Expected counts can be fractional because they are probability-weighted quantities. A small real cohort will not necessarily match those counts. Include fixed campaign costs only once for the cohort rather than charging them once per order.

Connect contribution with the next decision

The multi-product break-even calculator with unit sales mix can combine different product contributions after you understand their individual delivery economics. Keep the outcomes and fee conventions consistent before combining products.

For an invoice-level percentage, the profit margin calculator answers a simpler question. It does not replace this outcome tree. Check actual courier and payment contracts for retries, taxes, fee refunds and damage compensation that the entered model does not include.

A few questions, answered

Is the customer-return percentage a share of all orders?

No. It is conditional on delivered orders; RTO is a share of all placed orders.

Does recovered stock count as sale cash?

No. It reduces modeled lost product cost; future resale is outside this cohort calculation.

Are courier rates or RTO rates fetched?

No. All costs and probabilities are your entered scenario.

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