Cash on delivery cost calculator

With cash on delivery you pay for every parcel you send, but you are only paid for the ones customers accept. The real profit of a cash-on-delivery order is the profit on delivered orders minus what refused parcels cost you, spread across everything you send.

How it is worked out

• Profit on a delivered order = order value − product cost − delivery cost − (collection fee × order value)
• Loss on a refused parcel = delivery cost + return cost. The product is assumed to come back in a condition you can sell again.
• Average profit per parcel = (1 − refusal rate) × profit on a delivered order − refusal rate × loss on a refused parcel
• Break-even refusal rate = profit on a delivered order ÷ (profit on a delivered order + loss on a refused parcel)

Example

An order of 50 with products costing 20, delivery at 4, a 2% collection fee and a return charge of 2 makes 25 when delivered and loses 6 when refused. If 15 of every 100 parcels come back, each parcel sent earns 20.35 on average — and you stop making money only when more than about 80% are refused. With a low-priced order the margin for refusals is much smaller.

Lowering refusals

Confirm new orders by phone or message before shipping, show the full price including delivery before checkout, and describe products well enough that nothing surprises the customer at the door. Our guide to selling online with cash on delivery covers each step.