How to Calculate CAC Payback Period for Subscription Businesses

I show you how to correctly calculate the CAC payback period for a subscription business using cohort analysis. Free model download included if you want to plug in your own numbers.

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Related Videos:
🚩 Cohort Analysis | How VCs Calculate Customer Retention: https://youtu.be/OwCATJh4lNg?si=xTXvLcjdxs4tUJXS
🚩 How Prepaid Subscriptions Triple LTV for eComm: https://youtu.be/_uWyDjMv9Cs
🚩 Finance for eCommerce Playlist: https://youtube.com/playlist?list=PLdoBuNNnCmdVb9nppKtWV1J7-0hu8XHQz&si=bKzRfA73xHzR6PJ3
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In this video, we walk through how to use customer cohorts to understand the real payback period calculation for a subscription-enabled eCommerce (subscription box business) & SaaS startup.

In my experience, 99% of founders calculate their CAC payback incorrectly, because they think about it on a 1-customer basis, and they don't incorporate customer churn and declining retention into their model of how the initial customer acquisition gets paid back.

In this video I will show you how to use your unit economics & customer cohorts to very accurately calculate this metric!

SECTIONS:
0:23 who's this video for and why does it matter (any business selling on a subscription)
1:17 overview of definitions (CAC, gross profit, CAC payback period, customer cohort)
3:19 unit economics setup and the classic miscalculation of CAC payback
4:00 why this traditional calculation of CAC payback is totally incorrect
5:26 CAC payback period calculation case study - eComm business with high churn rate
9:34 book a demo with Ordergroove https://www.ordergroove.com/eric/
10:27 CAC payback period calculation case study - SaaS business with low churn rate

If you have questions - leave a comment below and I'll try to help. Cheers!

#ecommerce #saas #customercohort #uniteconomics #cacpayback

Видео How to Calculate CAC Payback Period for Subscription Businesses канала Eric Andrews