Cohort Payback Curve

Metric

A cohort payback curve plots cumulative contribution per acquired customer against months since acquisition, one line per acquisition cohort. Payback is the month the curve crosses CAC.

Layman Explanation & Analogy

Group January's new customers and watch what they paid you over time; do the same for February. The month each group's running total covers what you paid to acquire them is the payback — separate stories for acquisition quality (starting depth) and retention quality (slope).

Mathematical Formula

Payback month = first age_month where cumulative contribution per customer >= CAC

Worked real-world example

A January cohort pays back in month 4 and keeps climbing (subscription-like); a March cohort never crosses zero. Blended ROAS called both months identical at 2.1x — the curves say scale January's source and kill March's.

What people get wrong & common traps

Compare cohorts only at equal ages, keep churned customers in the denominator (dropping them is a tautology), and never extrapolate young censored cohorts from hope. Below ~15% repeat revenue, this machinery is overkill — contribution-margin ROAS suffices.

Related terms