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Precise choice of potassium (K) source and application method does matter for its cost-effectiveness. This study was aimed to evaluate the best source and method of K fertilizer application to improve cotton productivity and profitability under an arid climate. Three different K sources (KNO3, K2SO4 and KCl) were applied at 100 kg ha-1 by four methods, i.e. a) basal application, b) side dressing, c) fertigation and d) foliar application of 2% K2SO4. The highest productivity and profitability were recorded with K2SO4 applied as foliar application. Total boll weight per plant was similar in foliar applied K2SO4 and basal application of KNO3. Better boll opening in foliar applied K2SO4, perhaps, played decisive role for increased seed-cotton yield. For basal application and side dressing, KNO3 produced the highest seed-cotton yield, but the benefit cost ratio was better for foliar applied K2SO4. In crux, foliar application of K2SO4 might be opted to improve the seed cotton yield, fiber quality and net returns under the arid climate. However, soil K application through K2SO4 and/or KNO3 is essential to balance the K removal from soil.