The number of days it takes for a customer cohort’s cumulative contribution margin to equal the cost of acquiring them.
Payback Days = Days until Cumulative Contribution Margin ≥ CAC
| Metric | Definition |
|---|
| Cumulative Contribution Margin | Running total of contribution margin generated by a customer cohort over time |
| CAC | Customer Acquisition Cost — total ad spend divided by new customers acquired |
| Metadata | |
|---|
| Type | Number (Days) |
| Data Source | Shopify |
| Aggregation | Average |
Example
Your January cohort of 500 new customers cost $25,000 to acquire (CAC = $50/customer):
| Days Since Acquisition | Cumulative CM | % of CAC Recovered |
|---|
| 30 days | $15,000 | 60% |
| 60 days | $22,500 | 90% |
| 75 days | $25,000 | 100% |
| 90 days | $30,000 | 120% |
How It Works
Payback Days tracks a customer cohort from acquisition through subsequent purchases, summing the contribution margin from each order. The metric identifies the day when cumulative contribution margin equals or exceeds the original customer acquisition cost. Shorter payback periods indicate healthier unit economics and faster reinvestment of marketing capital.
When to Use
| Scenario | Action |
|---|
| Evaluating acquisition efficiency | Compare payback across channels to find fastest-returning sources |
| Cash flow planning | Shorter payback means faster capital recovery for reinvestment |
| LTV:CAC analysis | Payback under 12 months typically indicates sustainable growth |
| Seasonal planning | Account for longer payback during low-margin periods |
| Metric | Relationship |
|---|
| Contribution Margin | The margin used to calculate cumulative payback |
| CAC | The acquisition cost that payback recovers |
| LTV | Lifetime value — compare to CAC alongside payback |
| LTV:CAC | Ratio showing how many times over customers repay acquisition cost |
