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Break-even ad spend for a COD store: the most you can pay per order

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Every ROAS calculator on the internet was built for a store that gets paid at checkout. If a share of your parcels come back, the most you can afford to pay for an order is a good deal lower than those calculators tell you — and this works out by how much.

The short answer

You pay for advertising on every order placed. You only get paid on the ones that are delivered. And the ones that are not delivered do not merely earn nothing — they cost you freight in both directions.

So the most you can pay per order placed is (profit on a delivered order × delivery rate) − (cost of a return × the rest). At a 70% delivery rate, an order that leaves you PKR 1,800 delivered and costs PKR 500 when it comes back supports about PKR 1,110 of ad spend, not 1,800.

That gap is the whole point. A prepaid-store calculator would let you bid about 60% more than you can afford, and your ad account would report a healthy return the entire time, because the ad platform counts the order the moment it is placed.

After goods, packaging, freight and courier deductions — but before advertising.

PKR

Share of orders placed that actually get delivered and paid for. Yours, from your courier's own reports.

%

Freight out and home, plus packaging you cannot reuse.

PKR

What the customer pays. Used only to express the answer as a ROAS.

PKR

Most you can pay per order placed

—

Enter your delivery rate to see the answer.

A prepaid calculator would sayProfit per delivered order, ignoring returnsPKR 1,800
The differenceWhat the naive figure would overspend by, per order—
Equivalent cost per delivered order—
Break-even ROASMeasured on delivered revenue, not on counted conversions—
Revenue per order placed—

These are example figures. The profit and order value carry over from the COD profit calculator with its illustration figures. Delivery rate starts empty — it is the number that decides this answer, it varies enormously between stores and cities, and we are not going to guess it for you. Your courier reports it.

The sum, written out

  • Max cost per order placed = delivered profit × delivery rate − cost of a return × (1 − delivery rate)
  • Max cost per delivered order = the above ÷ delivery rate
  • Break-even ROAS = (order value × delivery rate) ÷ max cost per order placed

Note what the ROAS is measured against: delivered revenue, not the revenue your ad platform reports. Those are different numbers and the difference is the returns.

Why the ad platform’s ROAS flatters you

An ad platform records a conversion when the order is submitted. It has no way of knowing whether the parcel was accepted three days later, and nothing ever tells it. On a prepaid store that does not matter much, because the money arrived at the same moment. On cash on delivery it is the entire question.

The practical consequence: a campaign showing 3× in the ad account can be losing money, and the only way to see it is to compare what the platform counted against what the courier actually delivered and remitted. That reconciliation is the thing analytics structurally cannot do — see why your revenue never matches your bank.

A worked example

Take the illustration order: PKR 3,200 collected, PKR 1,800 profit once delivered, PKR 500 lost on one that comes back.

  • At 90% delivered — 1,800 × 0.9 − 500 × 0.1 = PKR 1,570 per order placed.
  • At 70% delivered — 1,800 × 0.7 − 500 × 0.3 = PKR 1,110.
  • At 50% delivered — 1,800 × 0.5 − 500 × 0.5 = PKR 650.

The delivery rate fell by 40 points and the affordable ad price fell by 59%. That is the leverage nobody budgets for: on cash on delivery, improving delivery rate is usually a cheaper way to buy headroom than improving the ads.

What this cannot know

  • It is break-even, not a target. Paying exactly this much means you make nothing. Decide what you want to keep per order and bid below it.
  • It counts one order, once. No repeat purchases, no lifetime value. If a real share of your customers order again, you can afford more than this says — but only if you actually measure the repeat rate rather than assuming one.
  • It assumes your delivery rate holds as you scale. It usually does not: spending harder tends to reach colder buyers who refuse more parcels, so the affordable price falls exactly when you are trying to raise it.
  • It has no view on your delivery rate. That field starts empty on purpose. Your courier reports it and it is specific to your cities, your product and your confirmation process.

Questions people ask

What is a good ROAS for a cash-on-delivery store?
There is no single figure, and any calculator that gives you one has quietly assumed a delivery rate and a margin. Work out your own break-even ROAS from your delivered profit and your delivery rate, then set your target above it by whatever you want to keep. A 2x that clears break-even is better than a 4x that does not.
Why is my ad account's ROAS higher than this?
Because the ad platform counts an order when it is placed and never hears whether it was delivered. On cash on delivery a meaningful share of those counted orders come back, so the platform's revenue figure includes money you never received and never will.
Should I include the cost of returns in my ad budget?
You should include it in the profit calculation that sets your ad budget, which is what this page does. Returns are not an advertising cost, but they change how much advertising you can afford, and treating them as separate is how stores end up bidding a price the margin cannot carry.
How do I find my delivery rate?
Your courier reports it — delivered against booked, over a period long enough to be meaningful. Do not use a single week, and do not use the figure for your best city. If you use several couriers, the blended rate is the one that matters for setting a bid.
Does improving delivery rate really matter more than cutting ad cost?
Often, yes, and the arithmetic on this page shows why: delivery rate multiplies your profit and your return losses at the same time, so it moves the affordable ad price faster than the ad price itself does. Whether it is true for you depends on your numbers, which is what the calculator is for.
Does this send my numbers anywhere?
No. It runs entirely in your browser. Nothing is submitted, stored or transmitted, and there is no account or email box on this page.

This is the arithmetic Markazi Panel does automatically, on every order, from a single line of script — see a dashboard with a month of data in it, or ask anything at hello@markazipanel.com.

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