How do you calculate CAC payback for a Shopify store?
- First-order margin = AOV × gross margin. This is what the first purchase contributes toward CAC.
- Gap = CAC − first-order margin. If it is zero or negative, the customer has paid back on day one.
- Monthly repeat margin = AOV × gross margin × repeat orders per customer per month.
- Payback period = gap ÷ monthly repeat margin, in months.
Use the same definition of CAC (blended or paid) and the same margin (gross or contribution) everywhere you compare results.
What formula does this CAC payback calculator use?
Monthly repeat margin g = AOV × gross margin % × repeat orders per month
Payback (months) = (CAC − first-order margin) ÷ g
With monthly decay k: payback = ln(1 − k × gap ÷ g) ÷ ln(1 − k)
With decay, the repeat-order rate in month t is the month-1 rate × (1 − k)t − 1, so cumulative repeat margin levels off at g ÷ k. If CAC is above first-order margin + g ÷ k, the customer never pays back and the calculator says so.
Worked example: how long does a $60 CAC take to pay back?
A store with a $60 CAC, $75 AOV, 55% gross margin and 0.12 repeat orders per customer per month:
| Step | Calculation | Result |
|---|---|---|
| First-order margin | $75 × 55% | $41.25 |
| First order vs CAC | $41.25 ÷ $60 | 68.75% covered |
| Gap to recover | $60 − $41.25 | $18.75 |
| Monthly repeat margin | $75 × 55% × 0.12 | $4.95 |
| Payback period | $18.75 ÷ $4.95 | 3.8 months |
If the repeat-order rate decays by 5% a month instead of staying flat, payback is ln(1 − 0.05 × 18.75 ÷ 4.95) ÷ ln(0.95) = 4.1 months, and cumulative margin per customer levels off at $41.25 + $4.95 ÷ 0.05 = $140.25.
How is CAC payback different from LTV:CAC?
LTV:CAC asks whether a customer is worth acquiring over their whole lifetime. CAC payback asks how long your cash is tied up before you get it back. A store can have a healthy LTV:CAC and still struggle with cash flow if payback is long, because the margin arrives slowly. Use both: the LTV calculator for lifetime value, this one for timing.
FAQ
What is a good CAC payback period for a Shopify store?
There is no universal benchmark. A shorter payback ties up less cash and depends less on repeat-purchase assumptions holding true. Judge it against how long your business can fund the gap between paying for a customer and earning the money back, and against how reliable your repeat-order data is.
What should be included in CAC?
Everything you spend to win new customers in a period, divided by the new customers acquired in that period: paid media, agency and creative fees, affiliate commissions and first-order discounts you treat as acquisition cost. Blended CAC divides total acquisition spend by all new customers; paid CAC uses only paid-channel spend and customers. Be consistent about which one you use.
Why calculate payback on gross margin instead of revenue?
CAC is paid in cash, and only the margin left after cost of goods can repay it. Payback on revenue looks faster than it is. If shipping, payment processing and packaging are material, include them and use contribution margin instead.
How do I estimate repeat orders per customer per month from Shopify data?
Take the customers whose first order fell in a given month, count the orders they placed in the following months, and divide by the number of customers times the number of months. For example, 1,000 new customers who place 360 repeat orders over the next 3 months average 360 ÷ (1,000 × 3) = 0.12 repeat orders per customer per month.
If you want payback measured by acquisition cohort and channel from your own Shopify data, Asabisoft does LTV and retention analytics for Shopify brands.