CAC and payback calculator.
Acquisition cost on its own says nothing. What matters is the ratio to what the customer is worth — and how long you carry the cost before she pays it back.
CAC
€150
LTV : CAC
1×
Lifetime contribution
€152
Payback
13.8 months
Above 3 is healthy. Below 1 means you lose money on every new customer.
Payback is how long the customer takes to earn back what she cost. It decides how fast you can scale without running out of cash.
01What belongs in CAC
Media spend is the obvious part. Agency fees, creative production and the tools used to win new customers belong there too — otherwise the number is prettier than reality.
Divide by new customers only, not by all orders. Mixing repeat purchases in gives an average that describes neither acquisition nor retention.
02Payback is the cash number
Lifetime value tells you whether the customer is profitable. Payback tells you whether you can afford to win her now. Two businesses with the same ratio can have very different room to scale if one recovers the cost on the first order and the other after a year.
A long payback period means growth is financed by cash. That is not wrong, but it should be a decision rather than a surprise.
03The ratio
The 3:1 rule of thumb comes from subscription businesses and does not travel equally well. As a rough guide it holds: below 1 you lose money on every new customer.
Well above 3 is rarely a sign of strength. It usually means you are buying too few customers — there is room to bid harder.
Questions
What is a good CAC?
One that is low enough against lifetime value and fast enough to recover that cash flow keeps up. A number without both comparisons means nothing.
Should agency fees count towards CAC?
Yes, the share of them that goes to winning new customers. Otherwise acquisition looks cheaper than it is, and scaling decisions rest on the wrong number.
Read on
What is CAC?
CAC (Customer Acquisition Cost) is what it costs to win one customer. We explain how CAC is calculated, and why it only makes sense alongside CLTV.
What is CLTV?
CLTV (Customer Lifetime Value) is the total profit a customer delivers across their lifetime. The metric that decides what you can afford to pay for a customer.
LTV:CAC-forholdet: hvad er sundt?
Forholdet mellem kundeværdi og anskaffelsesomkostning siger, om væksten er holdbar. Her er tommelfingerreglen, og hvorfor den ofte misbruges.
What is payback period?
Payback period is the time it takes a new customer to earn back their acquisition cost. It decides how fast you can reinvest, and how hard you can scale.