How to calculate true net profit on a COD order
Most profit formulas you will find were written for prepaid stores. They start from revenue and subtract cost of goods, which for cash on delivery skips the three costs that decide the answer.
Start from the right event
The first and largest correction is not arithmetic at all. An order earns when it is delivered and the courier has remitted for it, not when it is placed. Compute profit over placed orders and you are including parcels that will be refused — money that never existed.
The formula, in order
For a period, over delivered orders:
The three lines people leave out
C is over all parcels, not delivered ones. This is the single most common error. You paid to ship the refused parcels too; charging their freight only against delivered orders makes every delivered order look better than it was.
D exists at all. Return freight arrives on a courier invoice weeks later, detached from the order that caused it, so it frequently never gets entered anywhere.
G never appears on a document. The 4% withheld on delivered COD is not a bill you receive — it is an amount that did not arrive. Nothing prompts you to record it.
A method you can run this month
- Take one month of delivered orders — not placed.
- Sum the COD actually collected on them. That is A.
- Sum cost of goods for those orders. Any product without a cost price is a hole; list them rather than treating the cost as zero.
- Take the courier invoices for the month. All forward freight is C; all return freight is D; the GST line is F.
- Multiply A by 4% for G, and check it against what the remittances actually show as withheld.
- Add up the month's overheads including ad spend for H.
- Subtract. Compare the answer to what your dashboard said.
The gap between those two numbers is the reason this guide exists. If you would rather not do it by hand, the COD profit calculator models it from five inputs in about a minute, and Kaarobar computes it from your real orders continuously.
Per order or per period? Per period is the honest default, because C, E and H genuinely belong to the period rather than to any single order. Per-order profit is still useful for ranking products — just never let the per-order figures be summed and presented as the month, because the refused parcels are missing from that sum.
Questions merchants actually ask
- Should I count an order as revenue when it is placed or delivered?
- Delivered, and remitted. Under cash on delivery a placed order is a cost commitment, not income — a large share of them are refused, and you never collect that money while still paying freight both ways.
- How do I handle products with no cost price?
- List them and fill them in. Treating a missing cost as zero produces a flattering, wrong margin, and it silently misfiles those products as your best performers.
- Do I subtract withholding tax from profit?
- Yes — it is money that did not reach you. Deduct it inside net profit and also report it separately, because your accountant needs the figure on its own.