3min chapter

Lenny's Podcast: Product | Growth | Career cover image

Lessons from scaling Ramp | Sri Batchu (Ramp, Instacart, Opendoor)

Lenny's Podcast: Product | Growth | Career

CHAPTER

How to Sequence Payback Periods for a Company

The contribution margin is basically the profit that you make on a given customer. And then payback period is literally just how many months of that profit would it take to pay for let's say cost you $5,000 to acquire this customer and your estimated profit per month on the customer is 500,. That is a 10 month payback period. So as I say that, I'm sure you still have to make assumptions for payback period but at least they're more based in recency and you can evaluate them more quickly.

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