App Payback Period

App Payback Period is the time it takes for a user cohort's cumulative revenue, or contribution margin, to repay what you spent acquiring it.

You take the acquisition cost per user and divide by the revenue that user throws off each period, giving you the number of periods until you break even. Use contribution margin rather than gross revenue if you want the honest answer, since store fees, refunds, and delivery costs come off the top before anything repays your marketing. Shorter payback means you recycle cash into acquisition faster.

You pay an effective cost of one acquisition unit per installed user who converts, and each such user returns 0.25 units of contribution margin per month. Payback is four months. Anything that user pays beyond month four is profit; anything before it is you waiting to get your money back.

Payback ignores everyone who quits before the finish line. The math assumes the cohort keeps paying at that rate, but on apps with steep early churn, half the cohort can be gone before month four, so the true blended payback is longer than the per-user figure. Model it on the cohort's actual retention curve, not a flat monthly assumption.

Break-even on paper is not break-even in the cohort.