How do you calculate CAC payback period?

Payback period (months) = CAC ÷ monthly gross profit per customer. For example: A ₹600 CAC and ₹150 of gross profit per customer per month pays back in 4 months.

What Is CAC payback period? Definition, Formula and Example

What is CAC payback period?

CAC payback period is how long it takes for the gross profit from a new customer to cover what it cost to acquire them.

FormulaPayback period (months) = CAC ÷ monthly gross profit per customer

Payback matters most for cash. A brand can have a healthy LTV:CAC ratio and still run short of cash if each customer takes a year to pay back.

Shorter payback lets you reinvest sooner. Higher first-order margin, bundles and an early second purchase all shorten it.

Example

A ₹600 CAC and ₹150 of gross profit per customer per month pays back in 4 months.

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