CAC payback calculator
Estimate months to recover acquisition cost from monthly customer contribution.
Last updated
Written by Madly editorial
01 / Your inputs
Run the numbers
Example figures are filled in so you can see a result straight away. Replace them with your own. Results update as you type; no data is sent or saved.
Acquisition cost per new customer.
Constant contribution after variable costs, before acquisition: £40 CAC / £10 per month gives cumulative £10, £20, £30, £40 in months 1–4. Actual cash timing and retention can differ.
02 / Calculation
Estimated payback
Calculated result
3 months
Unit: months
Formula
Estimated payback (months) = customer acquisition cost (£) ÷ monthly contribution per customer (£/month).
How to read this
This is a planning ratio, not a promise of repayment. Cohort retention and actual order timing matter.
Assumptions
Monthly contribution is assumed constant and positive; real purchases are often uneven. This simple ratio excludes cash-flow timing within each month.
How to use this tool
- Enter your customer acquisition cost.
- Enter the contribution margin a customer produces each month.
- Read how many months it takes to earn back the cost.
- Compare against how long you can wait for cash to return.
Worked example
Illustrative example: £45 acquisition cost ÷ £15 monthly contribution gives 3 months.
What this measures
Payback compares the cost to acquire a customer with the contribution that customer provides per month.
Formula and units
Estimated payback (months) = customer acquisition cost (£) ÷ monthly contribution per customer (£/month).
Assumptions and review notes
Monthly contribution is assumed constant and positive; real purchases are often uneven. This simple ratio excludes cash-flow timing within each month.
This is a planning ratio, not a promise of repayment. Cohort retention and actual order timing matter.
A good payback period is one your cash flow can carry. A store with thin cash needs a short payback, while one with funding or strong margin can wait longer. Payback also rests on repeat purchase, so a long payback on a low-repeat product is a warning.
- Your cash position.
- Reorder frequency.
- Gross margin per order.
- Seasonality of repeat buying.
- Assuming monthly contribution without evidence.
- Ignoring that cash is tied up while you wait.
- Mixing revenue with margin.
- Using blended CAC that includes organic customers.
A closer look
Common questions.
- What is CAC payback?
- It is the time taken for a customer margin to repay what it cost to acquire them.
- How is it calculated?
- CAC divided by monthly contribution margin per customer.
- What is a good payback period?
- It depends on cash and repeat behaviour, so judge it against your own constraints.
- Should I use blended or paid CAC?
- Paid CAC is better when judging ad efficiency, blended when judging the whole business.
- What if customers rarely reorder?
- Then payback is effectively the first order, and you should use max CPA instead.