GuideThe numbers leadership asks about
CAC payback
Definition
The number of months before a new customer’s gross profit has repaid the cost of acquiring them. Until that month, every new customer is a use of cash.
How it’s calculated
Divide CAC by the contribution margin a customer produces per month. A customer acquired for DKK 12,000 who leaves DKK 1,500 a month after goods, shipping, fees and returns pays back in eight months. The threshold comes from your own balance sheet. Set payback against runway: cash divided by monthly burn gives the months the company holds, and a payback longer than that means growth is financed off the balance sheet, with the gap widening the faster you grow. Set it against the sales cycle too: the cash leaves at the campaign, repayment begins after the deal closes, and the full cash-out period is payback plus the cycle.
What to watch for
Check the divisor: if the monthly figure is revenue, the payback on the slide is shorter than the payback the bank account will live through. Compare the answer with runway; ten months of payback against six months of cash means every acceleration in spend draws down the balance sheet. Check where the clock starts, because a payback measured from the closed deal has skipped the sales cycle during which the cash was already out. And divide one by your monthly churn: if the average customer stays fewer months than payback takes, part of the base leaves before repaying its own acquisition.
The question you ask
“What is payback in months, and how does it compare with our runway?”