Analytics & Metrics

Payback Period

Quick answer

How many months until a customer's profit repays their acquisition cost.

Definition

Payback period divides CAC by monthly contribution margin per customer. A 3-month payback means cash returns fast enough to reinvest; a 12-month payback starves growth regardless of LTV. It is the metric cash-constrained brands should live by.

Why it matters

LTV justifies the relationship; payback decides whether you can afford it now.

Formula

CAC / Monthly contribution margin per customer

Benchmarks

Under 6 months healthy for D2C; under 12 for subscription

All glossary terms

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