How To Calculate Cost of Acquisition Payback in Odoo | Arithmix

Calculating the cost of acquisition payback is an important step in determining the profitability of a business. This metric helps you determine how long it will take for your investment to pay off and start generating profits. In this article, we will discuss what cost of acquisition payback is, when it is valuable to calculate it, and how to calculate it.

What Is Cost of Acquisition Payback?

Cost of acquisition payback is a financial metric that measures the amount of time it takes for a business to recover the cost of acquiring a new customer. This metric takes into account the total cost of acquiring a customer, including marketing and advertising expenses, sales commissions, and other related costs. The cost of acquisition payback is calculated by dividing the total cost of acquiring a customer by the revenue generated by that customer over a specific period of time.

For example, if it costs $100 to acquire a new customer and that customer generates $50 in revenue per month, the cost of acquisition payback would be 2 months. This means that it would take 2 months for the business to recover the cost of acquiring that customer.

When Is It Valuable To Calculate Cost of Acquisition Payback?

Calculating the cost of acquisition payback is valuable for businesses that are looking to determine the profitability of their marketing and sales efforts. This metric can help businesses identify which marketing and sales channels are generating the most revenue and which ones are not worth the investment.

Additionally, the cost of acquisition payback can help businesses determine the lifetime value of a customer. By understanding how long it takes to recover the cost of acquiring a customer, businesses can determine how much revenue that customer is likely to generate over their lifetime. This information can help businesses make informed decisions about how much they are willing to spend to acquire new customers.

How to Calculate Cost of Acquisition Payback

To calculate the cost of acquisition payback, you will need to gather information about the total cost of acquiring a customer and the revenue generated by that customer over a specific period of time. Once you have this information, you can use the following formula to calculate the cost of acquisition payback:

Cost of Acquisition Payback = Total Cost of Acquiring a Customer / Revenue Generated by the Customer

For example, if it costs $100 to acquire a new customer and that customer generates $50 in revenue per month, the cost of acquisition payback would be:

Cost of Acquisition Payback = $100 / $50 = 2 months

By calculating the cost of acquisition payback, businesses can make informed decisions about their marketing and sales efforts and determine the lifetime value of their customers. This metric is an important tool for any business looking to improve their profitability and make data-driven decisions.

How Do You Calculate Cost of Acquisition Payback in Odoo

Odoo itself isn’t naturally geared towards letting you calculate complex metrics like Cost of Acquisition Payback. As an alternative, teams typically use products like Arithmix to import data from Odoo 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 Odoo, combine it with data from other systems, and create calculations like Cost of Acquisition 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 Cost of Acquisition Payback in Arithmix

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

Arithmix is designed to give you the power to build any calculations you want on top of your Odoo 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.