How Customer Acquisition Payback Period Works
Compare CAC with the contribution generated by the customer's purchases over time. Subscription businesses often express the result in months; repeat-purchase businesses may use orders or cohorts.
A Simple Example
If CAC is $300 and a customer contributes $50 per month, the simplified payback period is six months.
Why Customer Acquisition Payback Period Matters
Payback shows how quickly growth spending returns cash that can be reinvested.
Common Misreading
A short payback calculation can be misleading if it uses revenue instead of contribution, ignores churn or assumes future purchases that have not been observed.