Customer acquisition cost & payback
A fictional Indian D2C brand can increase acquisition spend, but discounts and refunds are eroding contribution. Would you scale the campaign?
Quick learn
Customer acquisition cost (CAC) is acquisition spend divided by new customers from the same cohort. Contribution payback happens when accumulated order contribution covers that cost.
- ₹3,00,000 spend
- 1,000 new customers
- ₹300 CAC
- ₹336 expected contribution
The first order contributes ₹240. At 0.4 expected repeat orders in 90 days, contribution reaches ₹336 per customer, leaving ₹36 after CAC before fixed costs.
Deep dive
Net revenue stays at ₹1,000 per order in this fictional cohort. Change cost and repeat orders to see when the acquisition investment is recovered.
Show me why
₹3,00,000 cohort spend ÷ 1,000 new customers.
Show me why
₹1,000 net revenue − ₹760 variable cost.
Show me why
₹300 CAC ÷ ₹240 per order, less the first order, with a minimum of zero.
Show me why
₹240 × 1.4 expected orders − ₹300 CAC.
To decide whether to scale, check repeat timing, refunds and the marginal cost of acquiring additional customers. The expected repeat rate averages across everyone acquired, including buyers who never return.
Apply it
Interview prompt. How would you separate acquisition from retargeting existing customers and verify repeat contribution?
Apply this in Growth Budget Lab