payback period calculator.
cac ÷ (arpu × margin)
- monthly gross profit per customer
- $23.38
- payback period
- 5.1 mo
> worked example
Your CAC is $120. Customers place orders worth $85 every two months (0.5×/mo), and gross margin is 55%. Monthly gross profit per customer is $23.38 (85 × 0.5 × 0.55). Payback period is 5.1 months, you recoup acquisition cost in just over one quarter, well inside the 12-month threshold most DTC brands use as a cash-efficiency signal.
takeaway, Payback under 12 months gives you room to reinvest. Above that, you're floating acquisition cost on working capital, fine for high-LTV brands, painful for everyone else.
> when operators reach for this
- DTC founders evaluating cash flow risk before scaling paid spend, a long payback means more working capital tied up.
- CFOs and operators modelling how a margin improvement (new supplier, reduced returns) shortens the payback curve.
- Growth leads comparing payback across channels, paid social vs email re-engagement vs affiliate.
- Subscription brand operators using payback as a complement to LTV:CAC when pitching to investors on capital efficiency.
> the calculation
- monthly gross profit per customer
aov × purchase frequency (per month) × gross margin % - payback period
cac ÷ monthly gross profit per customerResult is in months. Sub-12 is the common DTC benchmark for capital-efficient acquisition.