Payback is 14 months. Half the cohort has gone by month nine.

Payback periods are calculated on an average customer who does not exist, and the arithmetic fails in one specific, expensive direction.

By Steve 4 min read
Abstract bridge artwork for Payback is 14 months. Half the cohort has gone by month nine.

A CAC payback period is one of the few numbers in a growth plan that looks like a fact. Acquisition cost divided by monthly gross contribution. Fourteen months. It gets written into the board pack, used to justify a bigger marketing budget, and quietly assumed to mean that a customer acquired in January is profitable by the following March. It rarely means that. Payback calculated on averages is systematically optimistic, and the size of the error depends on something most businesses do not routinely measure: how unevenly churn is distributed…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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