My courier charges a cash-on-delivery fee per order; how do I see what it does to my margin?
Add the COD fee, as it appears on your courier's invoice, to the product cost, keep the selling price as it is, and compare the two margins. The calculator has no fee field, but a fixed fee per order is, in the end, a cost of that order.
Why this fee deserves its own check
Cash on delivery reassures many shoppers in the Gulf, so most sellers offer it. Couriers usually charge an extra fee for collecting the cash and passing it on to you. That fee is roughly the same amount per order and does not grow with the product's price. That is the problem: as a share of a cheap order it is far larger than as a share of an expensive one.
Do not rely on a figure another seller mentioned. Open the invoice from your own courier and read the fee actually deducted on a COD order.
The comparison in numbers
Say your invoice shows 10 per order. Run each product twice in the Profit margin calculator: once with its cost, once with its cost plus 10.
A phone accessory costing 40 and selling for 79: margin 49.37%, profit 39.
With the COD fee (cost 50): margin 36.71%, profit 29. The margin fell by about 12.7 points.
Headphones costing 200 and selling for 399: margin 49.87%, profit 199.
With the COD fee (cost 210): margin 47.37%, profit 189. The margin fell by only 2.5 points.
Both products start with almost the same margin, yet the same fee took about a quarter of the accessory's profit and less than 6% of the headphones' profit.
What to do with the result
- Nudge small orders towards prepaid, for example with a small discount worth less than the fee, and keep the difference.
- Set a minimum order value for COD, if your store platform lets you.
- If you want the customer to cover the fee, find the price that absorbs it and keeps your target margin with the Selling-price calculator, entering the fee as a fixed fee.
- If you sell many cheap items, offer bundles to lift the order value so the fee spreads over a larger amount.
The other cost COD hides
Some COD orders are refused at the door, and you pay the delivery and the return with no sale at all. That is not a cost of a successful order, but the successful ones end up paying for it. If your records show a known refusal rate, spread the cost of refused orders over the delivered ones and add each order's share to the cost as well.
Common questions
My fee is a percentage of the order, not a fixed amount. What then?
Work out the amount on the product's price and add it to the cost, or use the selling-price calculator, which has a field for percentage fees.
Do I add the fee to every item in the order?
No, the fee is per order. If an order holds several items, add the fee once to the cost of the whole order.