The Game with Alex Hormozi 12. Payback Period PPD | $100M Lost Chapters Audiobook
Nov 14, 2025
Discover the crucial concept of payback period and how it impacts customer acquisition. Alex cleverly uses a lemonade stand analogy to break down pricing, margins, and lifetime value. Learn about calculating customer acquisition cost and why a shorter payback accelerates growth. He demonstrates how to leverage customer-generated gross profit to finance growth without external capital. Explore the difference between slow and fast payback scenarios and the potential for exponential growth by reinvesting profits.
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Payback Period Defines Growth Velocity
- Payback period (PPD) is the time it takes to recover acquisition costs from a new customer's gross profit.
- Faster payback compresses cycles and multiplies growth potential compared to slow returns.
Lemonade Stand Example For LTGP
- Alex uses a lemonade stand to illustrate recurring revenue: $10/month, five-month average customer life, $8 gross profit per month.
- That equals $40 lifetime gross profit and shows how margins and tenure create LTGP.
Calculate CAC From Actual Spend
- Always calculate CAC alongside lifetime gross profit to judge growth potential correctly.
- Divide total marketing and sales costs by new customers over a period to find CAC empirically.