Payback period = acquisition cost ÷ monthly gross profit per customer
$240 ÷ $62 = 3.9 months
Why does the wait matter as much as the total?
You pay for the customer now, and the money comes back in instalments. A business that wins 30 customers a month at $240 each spends $7,200 up front, every month, and each group takes months to repay. The faster you grow, the bigger the sum that is out at once. Plenty of businesses with good lifetime value have still run out of money while waiting to collect it, which is why payback sits right beside lifetime value on the short list of numbers an owner should know.
When does a Wagga Wagga gym get its $240 back? (example figures)
A gym in Wagga Wagga charges $70 a month. After card fees, the booking app's per-member charge and the towel service, each member leaves $62 a month in gross profit. Winning a member costs $240 in ads, a free first week and the time a trainer spends on the tour. The simple sum says payback in 3.9 months.
The owner tracks the 30 people who joined in March, because not all of them stay.
| Month | Members still paying | Gross profit that month | Repaid so far, of $7,200 |
|---|---|---|---|
| 1 | 30 | $1,860 | $1,860 |
| 2 | 27 | $1,674 | $3,534 |
| 3 | 24 | $1,488 | $5,022 |
| 4 | 22 | $1,364 | $6,386 |
| 5 | 21 | $1,302 | $7,688, paid back |
The March group pays back in month 5, not month 4, because nine members left along the way. The members who stayed are paying for the ones who did not. Had half the group cancelled by month 3, payback would have slipped to month 6 or 7, and the gym would have been funding that gap from its own account.
Two things shorten the wait. Keeping more of the new members through their first 90 days does it without any extra ad spend. Charging a joining fee does it at the door, because the first month's gross profit arrives bigger.
Where does CoraVision find the two halves of the sum?
The cost half comes from your ad accounts: CoraVision's dashboard puts a 7-day cost per acquisition on its Google Ads and Meta cards, refreshed every night once they are connected. The profit half begins with a figure Cora asks for early in the onboarding call: your average sale. How long members stay lives in your booking or membership software, and it is the figure that turns a neat payback sum into a true one.
Questions
How long a payback can a small business afford?
As long a wait as your cash can carry. Every new customer is cash out today and margin back over months, so the more customers you win, the more cash is tied up waiting. A payback that suits a business with three months of cash in the bank can strand one with three weeks.
Does a business with one-off sales have a payback period?
In effect, no time at all. A removalist or a wedding florist sells once, so the margin on the first job has to cover the cost of winning it on the day. If it does not, the customer never pays back, however long you wait.
Should payback be worked out on revenue or on margin?
Margin. The revenue from a customer also pays for the stock, the staff and the rent, so only the gross profit is free to repay the cost of winning them. Payback worked out on revenue looks months shorter than it is.