How To Calculate CAC Payback in Acumatica | Arithmix

Calculating CAC payback is an essential part of any business's financial planning. It helps you determine how long it takes for your investment in acquiring new customers to pay off. This calculation is especially useful for businesses that rely heavily on customer acquisition to grow their revenue. In this article, we will discuss what CAC payback is, when it is valuable to calculate, and how to calculate it.

What Is CAC Payback?

CAC payback is the amount of time it takes for a business to recover the cost of acquiring a new customer. This cost includes all the expenses associated with acquiring a customer, such as marketing, advertising, sales, and customer support. The CAC payback period is calculated by dividing the total cost of acquiring a customer by the revenue generated by that customer over a specific period.

For example, if a business spends $1000 to acquire a new customer and that customer generates $200 in revenue per month, the CAC payback period would be five months. This means that it would take five months for the business to recover the cost of acquiring that customer.

When Is It Valuable To Calculate CAC Payback?

Calculating CAC payback is valuable for businesses that rely heavily on customer acquisition to grow their revenue. It helps businesses determine the effectiveness of their customer acquisition strategies and identify areas for improvement. By calculating CAC payback, businesses can also determine the lifetime value of their customers and make informed decisions about how much to invest in customer acquisition.

Additionally, CAC payback is valuable for businesses that are looking to raise capital or attract investors. Investors often look at a business's CAC payback period as an indicator of its financial health and growth potential.

How to Calculate CAC Payback

To calculate CAC payback, you need to know the total cost of acquiring a customer and the revenue generated by that customer over a specific period. The formula for calculating CAC payback is:

CAC Payback Period = Total Cost of Acquiring a Customer / Monthly Revenue Generated by the Customer

For example, if a business spends $1000 to acquire a new customer and that customer generates $200 in revenue per month, the CAC payback period would be:

CAC Payback Period = $1000 / $200 = 5 months

It is important to note that CAC payback is not a one-time calculation. It should be calculated regularly to track the effectiveness of customer acquisition strategies and identify areas for improvement.

Conclusion

Calculating CAC payback is an essential part of any business's financial planning. It helps businesses determine the effectiveness of their customer acquisition strategies and identify areas for improvement. By regularly calculating CAC payback, businesses can make informed decisions about how much to invest in customer acquisition and determine their growth potential.

How Do You Calculate CAC Payback in Acumatica

Acumatica itself isn’t naturally geared towards letting you calculate complex metrics like CAC Payback. As an alternative, teams typically use products like Arithmix to import data from Acumatica and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Acumatica, combine it with data from other systems, and create calculations like CAC Payback.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating CAC Payback in Arithmix

Calculating metrics like CAC Payback is simple in Arithmix. Once you've created your free account, you’ll be able to import your Acumatica data, and use it to create natural language formulas for metrics like CAC Payback.

Arithmix is designed to give you the power to build any calculations you want on top of your Acumatica data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.