How CAC Payback Is Calculated in StoreHero

Overview

CAC Payback tells you how long it takes to recover your Customer Acquisition Cost (CAC) from the profit generated by a customer. It is one of the most important metrics for understanding the sustainability of your marketing strategy.

StoreHero uses a profit-based payback model, which provides a significantly more accurate view than revenue-based models used in many analytics tools.

How StoreHero Calculates CAC Payback

StoreHero calculates payback using three key components:

1. CAC (Customer Acquisition Cost)
   → Your total marketing cost to acquire one new customer.

2. Gross Profit From That Customer
   → Revenue minus COGS, fulfillment, packaging, transaction fees, and VAT.

3. Time
   → The number of days or months required for accumulated gross profit to exceed CAC.

The Payback Formula

Payback Period = CAC ÷ Average Gross Profit Generated Per Customer Per Month

Example:

• CAC = $60

• Monthly Gross Profit per Customer = $20

• Payback Period = 3 months

StoreHero shows this visually in the LTV → Cohorts → Payback Curve.

What Costs Are Included in CAC?

CAC includes:

• Paid advertising spend (Meta, Google, TikTok, etc.)

• Other marketing costs (depending on your Marketing Cost Settings)

• Agency fees (if treated as marketing costs)

• Influencer / affiliate acquisition costs (if entered manually)

CAC is always calculated net of VAT, because ads and marketing fees do not contain VAT charges.

What Revenue Is Used for Payback?

StoreHero uses ex-VAT Net Revenue to calculate payback.

This revenue is then reduced by:

• COGS

• Fulfillment & shipping-related costs

• Packaging

• Transaction fees

• Any additional per-order costs you have configured

This results in Gross Profit per Customer, which is the key driver of payback.

Why Profit-Based Payback Is More Accurate

A revenue-based model would show unrealistic payback speeds. For example:

• A brand with high AOV but low margins

• A brand with heavy shipping or high fulfillment costs

• A subscription business with steep first-month discounts

Revenue tells you what customers pay, not what the business keeps.

By using gross profit, StoreHero protects you from:

• Overestimating LTV

• Overspending on CAC

• Underestimating payback windows

• Misreading contribution margin

This is especially important when scaling paid media.

Where to View Payback in StoreHero

You can find the payback visual under:

LTV → Cohorts → Payback Curve

You will see:

• CAC (flat line)

• Accumulated Gross Profit (growing line)

• The point where the lines intersect (payback moment)

• Payback duration in months

Summary

StoreHero’s CAC Payback model is designed to provide a realistic, financially grounded view of how quickly your investment in new customers pays back.

Understanding payback helps you:

• Set profitable CAC targets

• Scale paid acquisition safely

• Monitor efficiency over time

• Plan inventory and cash flow smartly