12. Payback Period PPD | $100M Lost Chapters Audiobook

Payback period equals PBD. How fast do you make your money back? If you think of what a business is, it's a box where you get a much higher return than the stock market on far less money. What makes business valuable is they are able to get 5x, 10x, 20x returns in a matter of weeks or months compared to 10% returns over years. Payback period equals the time it takes to break even on what you spent to get a new customer.

Example, you make $50 per month in gross profit from a customer. You pay $100 to acquire that customer. You get your first payment day one, so you get $50 of your original $100 back. Then you get your second payment on day 31 to get the remaining $50 of your $100 back. Therefore, your payback period is 31 days.

I'll be using a hypothetical business, a lemonade stand, throughout this section to illustrate the concepts and frameworks and to make acquisition models fun and accessible. Most importantly, I'm doing this to illustrate that these models work with all businesses, including yours, whatever that might be. So let's start a lemonade stand. All right, here we are, we've got a fledgling lemonade business. We've got aspirations to become the citrix kings of a lemonade empire.

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