CAC Payback Simulator
Cohort-curve simulator · no sign-up · shareable link
Breakeven ROAS answers "does this campaign pay today" — payback answers "when does this customer pay back, and what are they worth by then". Set what a customer costs, what they pay you monthly, and how fast they leave; the cohort curve shows cumulative margin crossing the CAC line, the payback month, and the LTV:CAC ratio investors actually ask about. Runs entirely in your browser; copy the link to send any scenario to a teammate.
Payback month = first month cumulative margin ≥ CAC · LTV = monthly margin ÷ churn
Fully-loaded: platform spend + agency + creative + discounts
ARPU for subscriptions; monthlyised repeat spend for D2C
Cohort churn, not blended — drag and watch payback slide
Month 5
Cumulative margin crosses ₹1,800 CAC.
4.1 : 1
LTV ₹7,324 · 24-mo capped ₹5,665.
Pays back in month 5 — excellent. Scaling paid acquisition is defensible.
Cumulative margin vs the CAC line — the crossing is the payback month
What each field wants
- Customer acquisition cost (CAC)
- Fully-loaded cost to win one customer: ad spend plus agency, creative amortisation and discounts — not just platform spend.
- Revenue per customer per month
- ARPU for subscriptions; for D2C, average monthly spend per acquired customer including repeat orders.
- Gross margin
- Converts revenue into the margin that actually pays back CAC. Contribution margin if you have it.
- Monthly churn
- Share of the surviving cohort that leaves each month. 5% monthly ≈ half the cohort gone within a year — drag it and watch payback slide.
How this number is derived
A cohort, decayed monthly
Surviving customers in month m are (1 − churn)^(m−1) of the starting cohort. Each survivor contributes ARPU × margin that month. Cumulative margin is the running sum — the curve crosses the flat CAC line at the payback month. No spreadsheets, no hidden formulas.
LTV is the asymptote, not the promise
Infinite-horizon LTV = monthly margin ÷ churn. At 3% churn a ₹400 monthly margin is worth ₹13,333 — but only if churn genuinely stays 3% for years. The tool also shows 24-month capped LTV, which is the number to use when churn is a guess rather than a measurement.
Why payback beats LTV:CAC for decisions
A 5:1 LTV:CAC with a 22-month payback can still kill a business that runs out of cash in month 9. Payback governs survival; LTV:CAC governs attractiveness. Under 12 months is financeable for most D2C; over 18 needs a strong balance sheet or cheaper capital.
A subscription box at 6% churn
- CAC
- ₹1,800
- ARPU
- ₹799/month at 55% margin → ₹439 margin
- Churn
- 6% monthly
Month 4 cumulative ≈ ₹439 × (1 + 0.94 + 0.88 + 0.83) ≈ ₹1,606
Month 5 cumulative ≈ ₹1,949 ≥ ₹1,800 → payback in month 5
LTV = ₹439 ÷ 0.06 ≈ ₹7,324 → LTV:CAC ≈ 4.1:1Looks healthy — 4:1 with 5-month payback. But nudge churn to 9% and payback slides past month 8 while LTV:CAC falls to 2.7:1. The sensitivity to churn is the lesson: measure it from cohorts, never from a blended average.
Reading the verdict
Subscription/D2C orientation. Context dominates — use bands to argue, not to conclude.
| Payback under 6 months | Excellent | Aggressive scaling is defensible; cash recycles fast. |
|---|---|---|
| Payback 6–12 months | Healthy | The normal fundable range for paid acquisition. |
| Payback 12–18 months | Stretched | Needs confidence in churn and access to working capital. |
| LTV:CAC under 3:1 | Fragile | Any churn miss turns acquisition value-destructive. |
What this assumes, and what it doesn't model
Assumptions
- Churn is constant over the cohort lifetime — real cohorts usually churn faster early, which flatters this curve slightly.
- ARPU and margin are constant; no expansion revenue, no price rises, no cost inflation.
- CAC is paid in month zero and time value of money is ignored (fine under ~18-month paybacks).
Deliberately not modelled
- Does not model early-life churn skew — blended churn understates first-90-day losses.
- Does not model expansion/upsell, which is where subscription LTV is actually made.
- Single-cohort view: it does not stack cohorts into a business-level cash-flow forecast.
- Ignores servicing costs that scale with tenure (support, success) unless folded into margin.
Common questions
Blended churn or cohort churn?
Cohort churn — the share of one acquisition month's customers lost per month. Blended churn mixes new and old customers and almost always understates how fast fresh cohorts decay, which flatters payback by months.
How does this relate to LTV:CAC?
Payback tells you when CAC is recovered; LTV:CAC tells you how many times over. This tool shows both because a great ratio with a terrible payback is a cash-flow trap, and a fast payback with a thin ratio is a treadmill.
What about one-time-purchase D2C with repeat orders?
Convert repeat behaviour into a monthly equivalent: monthly ARPU ≈ AOV × orders-per-year ÷ 12, and "churn" ≈ 1 − repeat rate annualised the same way. It is an approximation, but it puts repeat-driven businesses on the same payback footing as subscriptions.
Can I share a scenario?
Yes — every slider lives in the URL. Copy the link and anyone opening it sees your exact scenario with no login.
Last reviewed September 6, 2026.