CAC payback calculator

CAC payback is the number of months until the contribution from a new customer's orders covers what it cost to acquire them. Count the first order's contribution, then add repeat contribution month by month. Paying back on the first order is ideal; three to six months is workable if you can fund the gap.

Paid back in: Month 4
First order covers: 46.7% of CAC
Left to recover after it: $24

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The formula

Left to recover = CAC − contribution from the first order
Months to pay back = left to recover ÷ contribution per customer per month, rounded up
If the first order covers CAC, it pays back on the first order

Worked example

It costs $45 to win a new customer.

Their first order leaves $21 after product cost, shipping, fees and returns.

Repeat orders then bring in about $6.50 a month per customer.

The first order covers 46.7% of CAC, leaving $24. At $6.50 a month that takes 3.7 months, so the customer pays back in month 4.

Questions

What is a good CAC payback period?

For most D2C brands, paying back on the first order is safest, and three to six months is workable if you have the cash to fund it. Beyond twelve months you're relying on customers staying, which is hard to prove.

Should I use revenue or contribution?

Contribution: what an order leaves after product cost, shipping, fees and returns. On revenue, payback looks two or three times faster than the cash really comes back.

How do I get contribution per customer per month?

Take the customers won in one month, add up the contribution from their repeat orders in the months after, and divide by the number of customers and months. Customers who never come back count too.

The full guide

CAC Payback Period: How Long Until a New Customer Pays Back?CAC payback is the months a customer's contribution takes to repay what you spent to acquire them. How to calculate it for a D2C brand, and what's healthy.