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Customer Payback Period Calculator

Calculate how long it takes to recoup the cost of acquiring a new customer based on their monthly gross profit.

Payback Period Calculator

$

Total cost to acquire a new customer

$

Monthly gross profit generated by each customer

Understanding Customer Payback Period

Customer Payback Period measures how long it takes for a business to recover the cost of acquiring a new customer. It's a critical metric for evaluating the efficiency of customer acquisition strategies and the overall health of your business model.

Formula:

Payback Period = CAC / Gross Profit per Customer per Month

Why this metric matters:

  • Indicates how quickly your business can recover its acquisition investments
  • Measures the efficiency of your growth strategy
  • Helps assess the cash flow implications of scaling your business
  • Provides context for evaluating customer lifetime value (LTV)
  • Helps determine if your business model is financially sustainable

Industry benchmarks:

SaaS

5-12 months

E-commerce

1-3 months

Financial Services

6-18 months

B2B Services

6-12 months

Consumer Apps

3-9 months

Retail

1-6 months

Note: This basic calculation doesn't account for the time value of money. For a more sophisticated analysis, especially for long payback periods, consider using discounted cash flow methods.

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