16 October 2026 · 5 min read
Cash on delivery: working out your real margin before you launch
The selling price is not the margin. Between product, shipping, delivery fees and returns, what's left per order is often a surprise.
Four lines, not one
A delivered order costs four things: the product, its transport to you, the courier's fee, and the cost of refused orders. Until those four lines are written down, the selling price tells you nothing.
The practical rule: always compute per DELIVERED order, never per placed order. They are very different numbers.
Refusal is a cost, not an incident
With cash on delivery, a share of parcels comes back. Each return costs you the outbound leg, often the return leg, and ties up stock for days.
Build a refusal rate into the calculation from the start. A product that is profitable at 100% acceptance can be loss-making at 75%.
A psychological price doesn't pay the fees
Many sellers pick a round price because it “feels right”, then discover the margin doesn't cover logistics. Do the opposite: start from total cost per delivered order, add the margin you want, and only then ask whether the resulting price is defensible.
If the defensible price is below your cost, the product isn't bad — it's bad for you, at that sourcing cost.