How To Calculate CAC Payback in Freshbooks | Arithmix

Calculating CAC payback is an important metric for any business looking to understand the effectiveness of their marketing and sales efforts. CAC stands for customer acquisition cost, which is the total cost of acquiring a new customer. CAC payback is the amount of time it takes for a business to recoup the cost of acquiring a new customer through their revenue. In this article, we will explain how to calculate CAC payback and why it is valuable for businesses to do so.

What Is CAC Payback?

CAC payback is a metric that helps businesses understand the return on investment (ROI) of their customer acquisition efforts. It is calculated by dividing the total cost of acquiring a new customer by the revenue generated from that customer over a certain period of time. The resulting number represents the number of months it takes for a business to recoup the cost of acquiring that customer.

For example, if a business spends $1000 on marketing and sales efforts to acquire a new customer and that customer generates $500 in revenue per month, the CAC payback would be 2 months. This means that it takes 2 months for the business to recoup the cost of acquiring that customer through their revenue.

When Is It Valuable To Calculate CAC Payback?

Calculating CAC payback is valuable for businesses of all sizes and industries. It helps businesses understand the effectiveness of their marketing and sales efforts, as well as the ROI of their customer acquisition strategies. By knowing the CAC payback, businesses can make informed decisions about how much to spend on customer acquisition and which strategies are most effective.

For startups and small businesses, calculating CAC payback is especially important. These businesses often have limited resources and need to make every dollar count. By understanding the CAC payback, they can make informed decisions about how much to spend on customer acquisition and which strategies are most effective.

Large businesses can also benefit from calculating CAC payback. They often have more resources to invest in customer acquisition, but they still need to make sure they are getting a good ROI. By understanding the CAC payback, they can make informed decisions about how much to spend on customer acquisition and which strategies are most effective.

In conclusion, calculating CAC payback is an important metric for any business looking to understand the effectiveness of their marketing and sales efforts. By understanding the CAC payback, businesses can make informed decisions about how much to spend on customer acquisition and which strategies are most effective. Whether you are a startup or a large business, calculating CAC payback is a valuable exercise that can help you improve your ROI and grow your business.

How Do You Calculate CAC Payback in Freshbooks

Freshbooks 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 Freshbooks 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 Freshbooks, 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 Freshbooks 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 Freshbooks 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.