Payback Period
How long a new customer takes to return their acquisition cost in profit. Short payback funds growth from revenue; long payback needs cash reserves.
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The definition
How long a new customer takes to return their acquisition cost in profit. Short payback funds growth from revenue; long payback needs cash reserves.
Why it matters to an owner
The cash-flow lens the LTV ratio hides: a 5:1 LTV:CAC that pays back over three years can still starve you this quarter.
Keep going
Customer Acquisition Cost (CAC)Total sales and marketing cost divided by new customers gained — the all-in price of one n…LTV (Lifetime Value)The total profit a customer generates over the whole relationship — repeat purchases, rene…Break-even CPA CalculatorThe most you can pay for a lead or a click before you lose money — from your price, margin…
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