CAC tells you how much acquisition costs; payback tells you how long it takes to recover that cost from contribution profit.
Why timing changes risk
Two channels can have identical LTV:CAC ratios but very different cash needs. A customer who repays CAC in the first order can fund growth sooner than one who repays over eighteen months.
A simple payback approach
Divide CAC by average contribution profit generated per customer per month. Use cohort-based contribution after variable service, product and payment costs.
The simple formula assumes stable monthly contribution. Seasonal stores and irregular repeat purchases should model cumulative cohort cash flow instead.
Sources
This guide is educational and does not provide financial, accounting, tax or legal advice.