Offer COD and 40–60% of orders choose it; refuse COD and some of those customers vanish. Neither extreme is right — the answer is a per-order cost calculation that most sellers never run.
COD's real cost stack
Per COD order: the COD fee (₹30–60 or 1–2.5%), the elevated RTO exposure (20–35% vs 2–5% prepaid — expected cost ≈ ₹30–60), and the remittance float (your cash, their account, a week). All-in, COD carries roughly ₹70–120 of cost prepaid doesn't.
Prepaid's advantages
Zero COD fee, dramatically lower RTO (prepaid customers rarely refuse — they paid already), instant cash, gateway fee (~2%) instead of COD fee. The trade: some customers don't convert without COD, so each lost prepaid-conversion has to outweigh the COD costs saved.
The break-even question
COD pays for itself when it converts orders that wouldn't exist prepaid — the incremental sale justifies the incremental cost. The seller's job is keeping COD for the genuinely-COD customer while nudging the convertibles to prepaid — incentives, partial-pay, trust signals.
The strategic mix
Offer both, price COD visibly (a COD fee line converts the fence-sitters), incentivise prepaid gently (₹30–50 discount), and filter repeat-COD-refusers. The mix that evolves from 'all COD early' to 'mostly prepaid at scale' is the normal arc.
Pure Parcel runs the whole stack described here — one place for every carrier.
See how →The playbook
Cost each mode honestly
COD fee + RTO delta + float vs gateway fee.
Keep COD for the unconvertible
It's conversion insurance — don't refuse it.
Nudge, don't force
₹30–50 prepaid discount + visible COD fee.
Filter chronic COD-refusers
Repeat refusals earn COD removal.
