Canonical formula calculator
PAYBACK PERIOD
How long it takes to earn back what you spent acquiring a customer — the most honest test of unit economics.
Worked example
How the number is worked out
The same customer, and the question the ratio cannot answer: how long until the money is back.
Starting from
Working
Six months before a customer has repaid what it cost to win them. Until then every new customer makes this month’s cash position worse, not better — which is how a growing business runs out of money.
What this tells you
Payback period tells you how many months a customer needs to stay before you have recouped what you spent acquiring them. Under 12 months is healthy for most businesses. Over 18 months means your unit economics depend on customers staying longer than they typically do — a fragile place to be.
When to use it
Calculate payback whenever CAC or unit margins change. Watch the trend — payback creeping up usually means CAC is climbing, margins are compressing, or both. Both call for action before the next fundraising cycle or the next quarter of growth spend.
What it doesn’t tell you
Payback period assumes monthly contribution stays constant, which it usually does not. It also does not account for churn — a 9-month payback is meaningless if customers leave at 6 months. Always pair it with retention and LTV when making decisions.
Reckon it, don’t just calc it
A calculator gives you today’s number. Reckon takes your plan to make your own money and checks it against what’s real — your margin, your price, what it takes to hit the take-home you want. No AI, no guessing — the same input always gives the same answer.