ModeldrillCohort payback by month
A financial modeling exercise from Modeldrill. Solve it with a live spreadsheet grid in your browser, with Fill right and Fill down, and it is checked the moment you submit.
The task
Follow one customer over a year. Fill the share still active (row 7: one less churn, raised to months since the start), the expected gross profit (row 8), the cumulative gross profit (row 9) and, in B11, the first month in which the cumulative total reaches the acquisition cost in B4.
What this exercise teaches
Weighting gross profit by survival gives the expected value of a customer, which is the honest way to judge acquisition spend.
A hint if you get stuck
In month 1 everyone is still active, so the power is month minus 1. Count the months still short of the acquisition cost and add one. A result of 13 would mean no payback within the year.
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