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Methodology

Cash-on-delivery Profit Impact Planner methodology

Measure failed delivery and handling cost for cash-on-delivery orders.
Duc Nguyen X.By Duc Nguyen X.· Founder, Margin101Last reviewed: View update historyMethodology

Educational only: Business decision support, not accounting, tax or legal advice.

Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Market-neutral small-business planning using your own assumptions.

1. Formulas and units

Successful Orders
successfulOrders = dispatched orders × success rate

Where

dispatchedOrders
Dispatched orders (operational units)Source: Business record
successfulOrders
Successful Orders (units)Source: Calculated output
Failed Orders
failedOrders = dispatched orders − successful orders

Where

dispatchedOrders
Dispatched orders (operational units)Source: Business record
successfulOrders
Successful Orders (units)Source: Calculated output
failedOrders
Failed Orders (units)Source: Calculated output
Collected Revenue
collectedRevenue = successful orders × revenue

Where

successfulOrders
Successful Orders (units)Source: Calculated output
collectedRevenue
Collected Revenue (currency units, ex tax)Source: Calculated output
Failed Delivery Loss
failedDeliveryLoss = failed orders × failed-delivery cost stack

Where

failedDeliveryCostPerFailedOrder
Failed-delivery cost (currency units, ex tax)Source: Business record
failedOrders
Failed Orders (units)Source: Calculated output
failedDeliveryLoss
Failed Delivery Loss (currency units, ex tax)Source: Calculated output
Contribution
contribution = successful contribution − failed-delivery loss

Where

failedDeliveryLoss
Failed Delivery Loss (currency units, ex tax)Source: Calculated output
contribution
Contribution (currency units, ex tax)Source: Calculated output
Maximum Failure Rate
maximumFailureRate = success contribution / (success contribution + failed loss)

Where

contribution
Contribution (currency units, ex tax)Source: Calculated output
maximumFailureRate
Maximum Failure Rate (decimal rate)Source: Calculated output

Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.

2. Worked example

Input assumptions

The worked rows below come directly from the registered engine and visible default fixture.

Calculation and outputs

Example

The worked rows below come directly from the registered engine and visible default fixture.

Successful Orders
900
Failed Orders
100
Collected Revenue
90,000 currency units
Failed Delivery Loss
1,900 currency units
Contribution
46,700 currency units
Maximum Failure Rate
74%

The exact engine-derived outputs are shown in the labelled rows below.

Interpretation

COD contribution shows whether successful collections cover outbound, collection and failed-delivery costs.

3. Validation and boundary checks

  • All values must be finite and inside the visible validation boundaries.
  • Rates are entered as percentages and calculations retain decimal precision.
  • Money uses one consistent ex-tax currency and planning period.

4. Assumptions and source classification

  • Provider fees, exchange rates, return behaviour and operating performance are user-entered scenarios.
  • No provider plan, jurisdiction, tax rate or market benchmark is embedded.
  • The engine retains full precision and display formatting never feeds back into calculation.

This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.

5. Limitations

  • The model does not forecast demand, provider changes, exchange rates or operational performance.
  • It does not replace accounting, tax, legal or financial advice.

This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.

6. Update and evidence policy

Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.

Change history

  1. : Initial public release of the planner and methodology after pre-launch calculation, content, source and interaction review.

Related reading

Guides to interpret the decision and its assumptions.

  • Failed Delivery Cost

    Measure the incremental cash and capacity cost of failed delivery without assuming a universal failure rate.

    Read guide

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