Payback period

How long a customer takes to repay what you spent acquiring them.

Example

$200 CAC and $40/mo of gross profit means a 5-month payback.

Important

Payback governs cash, LTV governs value. A wonderful LTV with a 24-month payback can still bankrupt you.

Related terms

• CAC (Customer Acquisition Cost)
• LTV (Lifetime Value)
• Unit economics
• Cash flow