Calculating COD profitability: formula and worked example
With cash on delivery, the selling price isn’t enough: what matters is what’s confirmed, delivered, returned, and what you paid to get each lead.
Published 12 October 2026 · Updated 12 October 2026 · 6 min read
A COD offer’s net profit is: delivered orders × selling price − (product and delivery cost of delivered orders + return cost of undelivered orders + advertising cost of all leads). With 100 leads at 5, 60% confirmation and 55% delivery, the example gives a net profit of 151.
The chain: leads, confirmed, delivered, returns
Not every lead is a sale. Some are confirmed by phone, only part of those orders get delivered, and the rest come back. Each step applies a rate:
- confirmed orders = leads × confirmation rate
- delivered orders = confirmed × delivery rate
- returns = confirmed − delivered
The net profit formula
Revenue comes only from delivered orders. Costs, however, are incurred even without delivery:
- revenue = delivered × selling price
- advertising cost = leads × cost per lead
- product and delivery costs = delivered × (product cost + delivery cost)
- return cost = returns × return cost
- net profit = revenue − (product and delivery costs + return cost + advertising cost)
Worked example (ReadyStore calculator defaults)
Product cost 10, selling price 40, delivery 7, return 4, lead cost 5, 100 leads, confirmation 60%, delivery 55%. Amounts are in your currency.
| Line | Calculation | Result |
|---|---|---|
| Confirmed orders | 100 × 60% | 60 |
| Delivered orders | 60 × 55% | 33 |
| Returns | 60 − 33 | 27 |
| Revenue | 33 × 40 | 1,320 |
| Advertising cost | 100 × 5 | 500 |
| Product cost | 33 × 10 | 330 |
| Delivery cost | 33 × 7 | 231 |
| Return cost | 27 × 4 | 108 |
| Net profit | 1,320 − (330 + 231 + 108 + 500) | 151 |
| Profit per delivered order | 151 ÷ 33 | 4.58 |
| Minimum selling price | 1,169 ÷ 33 | 35.42 |
| Break-even lead cost | (1,320 − 330 − 231 − 108) ÷ 100 | 6.51 |
The break-even lead cost (6.51) is the maximum price of a lead before the offer becomes loss-making, all else equal.
Sensitivity: small rate changes alter the result
Same costs and volume (100 leads), one parameter changed at a time.
| Scenario | Delivered | Net profit |
|---|---|---|
| Base: confirmation 60%, delivery 55% | 33 | 151 |
| Delivery at 45% (−10 points) | 27 | −11 |
| Confirmation at 70% (+10 points) | 38.5 | 259.5 |
| Lead cost at 7 (instead of 5) | 33 | −49 |
Ten points of delivery rate are enough to take the offer from +151 to −11. Measure your real rates before raising the budget.
Frequently asked questions
Why does ad cost cover all leads?
Because every lead was bought, whether it’s confirmed, delivered or not. Only delivered orders generate revenue.
What is the break-even lead cost?
The maximum cost per lead at which net profit is zero, given your current costs and rates.
Where can I find the calculator?
In the ReadyStore dashboard, alongside statistics and expense tracking.
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Calculate before you spend.
Create your store and use the calculator with your own numbers.