Where customer-lifetime-value asks whether a customer is worth winning, payback asks how long the company funds the gap. A business with excellent LTV and a thirty-month payback still needs capital to grow, because it pays for customers today and collects for years.
Under twelve months is generally considered strong for subscription software, and anything beyond twenty-four makes growth heavily dependent on external funding.
Example: Northwind Cloud spends $4,100 per customer who generates $3,600 a year at 78% margin, so $234 of gross profit a month. Payback is 17.5 months.
Related: customer-acquisition-cost, customer-lifetime-value, unit-economics, free-cash-flow, churn-rate