Commerce · Calculator
Four numbers decide whether a small business actually works.
Contribution margin, CAC payback, cohort retention and the cash conversion cycle — this page turns your own numbers into all four, with nothing invented. No "typical" benchmark is baked into a single formula below; where published context exists, it's shown as a clearly separate, labelled note.
Every result below is arithmetic on the fields you fill in — see “About this page” under Sources.
01 — The Four Numbers
What each one actually decides.
Contribution margin is what's left of a rupee of revenue after variable costs, before fixed costs are even considered — it's the floor test: if contribution margin is zero or negative, you lose money on every additional unit sold, no matter how much volume you do.
CAC payback is how many months it takes a new customer's gross margin to repay what it cost to acquire them. It matters because cash spent on acquisition is cash you don't have for anything else until it's repaid — a business can be profitable on paper and still run out of cash if payback periods stretch too long relative to how fast it's growing.
Cohort retention tracks a specific starting group of customers over time, rather than blending old and new customers into one number that can hide churn behind new-customer growth. A retention curve — and the monthly churn rate implied by it — tells you whether the business you'll have in a year looks like the one you have today.
Cash conversion cycle (CCC) measures how many days cash is tied up between paying suppliers and collecting from customers — inventory days, plus receivable days, minus payable days. A long CCC means growth consumes working capital; a short or negative one means growth can partly fund itself.
02 — The Calculator
Enter your own numbers.
Four independent blocks below — fill in only the ones relevant to you. Nothing is prefilled from an "industry standard," and nothing you type is sent anywhere; every result updates live in your browser.
What that computes to
- Contribution margin per unit
- ₹–
- Contribution margin %
- –
What that computes to
- CAC payback period
- –
For context only (not used in this calculation): published venture-context research puts healthy CAC payback roughly between 6 and 24 months depending on customer segment — see sources 4–5. A small business without external funding may need a much shorter payback than that.
What that computes to
- Retention over the period
- –
- Implied monthly churn rate
- –
Monthly churn is solved so that it compounds to your observed retention over the months you entered — it is not a simple average.
What that computes to
- Days Inventory Outstanding (DIO)
- –
- Days Sales Outstanding (DSO)
- –
- Days Payable Outstanding (DPO)
- –
- Cash conversion cycle
- –
03 — Reference, Not a Benchmark
The formulas, and which direction is healthier.
No numeric benchmark appears in this table — only the formula each metric uses and which direction is generally the healthier one to move in. What counts as "good" for your business depends on your margins, capital position and growth stage.
| Metric | Formula | What it tells you | Healthier direction |
|---|---|---|---|
| Contribution margin % | (Price − Variable cost) ÷ Price × 100 | How much of each rupee of revenue is left after variable costs, before fixed costs. | Higher — more room to cover fixed costs and profit. |
| CAC payback (months) | Customer acquisition cost ÷ average monthly gross margin per customer | How long it takes a new customer to "repay" what it cost to acquire them. | Lower — cash tied up in acquisition returns faster. |
| Cohort retention % | Customers still active ÷ customers at cohort start × 100 | What share of a starting group of customers is still with you after a given period. | Higher — less revenue lost to churn. |
| Cash conversion cycle (days) | DIO + DSO − DPO | How many days cash is tied up between paying suppliers and collecting from customers. | Lower, or negative — less working capital needed to grow. |
04 — FAQ
Common questions.
Does this calculator use any industry-average benchmarks?
No. Every result is computed only from the numbers you enter; the only external figures on this page are clearly labelled reference notes, never part of the calculation itself.
What counts as a "good" CAC payback period?
There's no universal answer — it depends on your margins, funding position and how long you can wait for cash back. Published venture-context research puts healthy ranges roughly between 6 and 24 months depending on customer segment, but a small business without external funding may need a much shorter payback than a venture-backed one.
Why does cohort retention use a compounding formula for monthly churn instead of just dividing?
Because churn compounds: losing 5% a month is not the same as losing 60% over twelve months — it's roughly 46%, since each month's churn applies to a smaller remaining base. The calculator solves for the monthly rate that compounds to your observed retention over the period you entered.
What if my cash conversion cycle is negative?
That's a genuinely strong position — it means you collect from customers before you have to pay suppliers, so growth funds itself rather than consuming working capital. Many subscription and prepaid-retail businesses run negative CCCs by design.
Is this financial or investment advice?
No. It is general strategic arithmetic. Actual accounting, GST/tax treatment and working-capital financing decisions should go through a chartered accountant or the lender directly.
05 — Sources
Where the concepts — and the context notes — come from
- Corporate Finance Institute, “Cash Conversion Cycle” — DIO/DSO/DPO formulas and definitions used in Block D.corporatefinanceinstitute.com · accessed 27 Jul 2026
- Corporate Finance Institute, “Break-Even Analysis” and contribution-margin reference definitions used in Block A.corporatefinanceinstitute.com · accessed 27 Jul 2026
- Croll, A. & Yoskovitz, B. (2013). Lean Analytics: Use Data to Build a Better Startup Faster. O’Reilly Media — the cohort-retention framework used in Block C.
- Bessemer Venture Partners, “Atlas” — published CAC payback benchmark ranges by customer segment, cited as context only, not used in the calculator.bvp.com/atlas · accessed 27 Jul 2026
- Small Industries Development Bank of India (SIDBI) — working-capital financing resources for Indian MSMEs, relevant if your cash conversion cycle above is long.sidbi.in · accessed 27 Jul 2026
About this page: every number shown by the calculator is computed live in your browser from the fields you fill in. No industry-average benchmark, typical CAC, or typical churn rate is used anywhere inside the four calculator blocks — the only benchmark figures on the page (source 4) are visually separated as context and explicitly not part of any formula above.
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