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CAC payback calculator

Customer acquisition cost is only expensive or cheap relative to what the customer goes on to buy. This calculator turns the cost of a new customer, the margin on an order and the store's real repeat rate into the number of orders and months it takes to get the money back.

The math is yours. Nothing you enter is stored or sent anywhere.

Months to pay back the acquisition cost

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At your repeat rate, how long until the customer has returned the cost of acquiring them

Orders needed to pay back
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Profit or loss on the first order after acquisition
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Contribution after twelve months, net of acquisition
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How payback is calculated

Each order leaves a contribution: the order value times the margin left after product, shipping, packaging and payment fees. Dividing the acquisition cost by that contribution gives the number of orders needed to earn it back. Dividing again by the customer's orders per month gives the payback period in months. A customer costing 48 dollars, leaving 40.50 dollars per order and ordering 2.2 times a year, pays back in a little over one order, or about six and a half months.

What to put in each field

Acquisition cost should be blended across all marketing spend and all new customers for a period, which the MER calculator produces. Margin here is after fulfilment, not the gross margin on the product alone, because shipping and fees come out of every order. Orders per customer per year must come from the store's own repeat purchase data for a cohort that is at least a year old; an assumed repeat rate is the most common way this calculation is made to look better than it is.

What the result tells you

A first-order loss is normal for consumable and subscription catalogs and dangerous for one-time purchase catalogs, where the second order may never come. The payback period says how long cash is tied up in each customer, which decides how fast the store can afford to grow. If payback is longer than the period over which customers actually stay, the acquisition is losing money regardless of what the ad platform reports.

Questions about this tool

What is a good CAC payback period for ecommerce?

Short enough that the customer is still buying when the cost is recovered, and short enough that the store can fund growth from cash rather than credit. For a consumable product with reliable reorders, several months can be fine; for a product bought once, payback needs to happen on the first order.

Should the calculation use gross margin or contribution margin?

Contribution after fulfilment, which is what this calculator asks for. Product margin alone ignores shipping, packaging and payment fees, and overstates how much of each order is available to repay acquisition.

How does this relate to customer lifetime value?

Lifetime value is the contribution a customer produces over their whole relationship; payback is the point at which that contribution passes the acquisition cost. Payback is the earlier and more certain of the two numbers, because it depends less on how long you assume customers will stay.

By CartKernel · Last reviewed

Where this arithmetic gets applied

Measure and retainEcommerce AnalyticsGA4, GTM, server-side tracking and attribution you can trustExploreMeasure and retainEmail and RetentionCart recovery, lifecycle flows and campaigns that drive repeat ordersExploreGet foundGoogle AdsSearch, Performance Max and YouTube tied to real marginExplore

More tools and answers

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