A profitable first order means growth funds itself. An unprofitable one means every new customer is a loan, repaid only if they come back, and the brand needs a clear view of repeat rate and timing.
Many brands deliberately run first orders at a loss. That works when it is a measured choice with a known payback period, not an accident of rising ad costs.
Formula
First-order profit = First-order contribution − New-customer CAC
Example
A first order leaving ₹520 of contribution against a ₹400 new-customer CAC earns ₹120 on day one.
Model contribution lifetime value from repeat behaviour, then see your LTV:CAC ratio and payback month.
Related terms
- New-customer CACNew-customer CAC is total marketing spend divided by the number of first-time…
- CAC payback periodCAC payback period is the number of months it takes for the contribution from a…
- LTV (customer lifetime value)LTV is the total value a customer generates over their relationship with a…
Part of the growth marketing glossary by Shiva Sharma.