Glossary
CAC payback period
How many months a customer takes to repay what you spent winning them.
Acquisition cost divided by monthly gross profit per customer. A ₦60,000 CAC against ₦10,000 monthly gross profit is a six-month payback.
This matters more than the LTV to CAC ratio when money is tight, because it answers a cash question rather than a profit question: how long is your money tied up before it comes back and can be spent again.
A company with twelve months of runway and an eighteen-month payback cannot fund its own growth. That is a real constraint, not a rounding error, and it is one of the first things a careful investor works out for themselves.
Related terms
- CAC (customer acquisition cost) — What it costs you, all in, to win one paying customer.
- Runway — How many months you can keep going before the money runs out.
- Burn rate — How much more money leaves the company each month than comes in.
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