Forget About LTV & CAC

What is Payback Period and Why Should You Care?

Read time: 4 minutes

Welcome to the first edition of our newsletter, where we provide valuable insights and strategies to help early-stage startup founders (like you) focus on the right things to successfully scale your startup.

I’m sure you’ve heard many times about the terms Lifetime Value (LTV) and Customer Acquisition Cost (CAC), in this edition we will shed light on an essential metric that every founder should understand and leverage but is often ignored: Payback Period.

So let's dive in and explore what it is, why it matters, and how you can improve this critical metric to drive your startup forward.

I. What is Payback Period?

In the world of startups, the Payback Period is a metric that measures the time it takes for a business to recoup its initial investment used in acquiring new customers. It provides valuable insights into the efficiency and profitability of your startup. The shorter the payback period, the faster you can generate returns and fuel further growth.

II. Why Should You Care about Payback Period?