How to calculate your “payback month” for new customers

Once a founder has stumbled on a winning ad formula, the temptation is to go all in. The ads convert, the line goes up, and growth is finally happening! Full speed ahead.

But paid acquisition strategies only translate into sustainable growth if new customers earn back the money you invested in acquiring them. Before you scale your Meta ad budget, you need a clearer view of how long that’s going to take, down to the month when an onboarded customer starts paying for themselves.

The founders of the 1440 Newsletter devised an extremely clear and actionable strategy to help you make this specific calculation. It helped them grow their media brand to a circulation of 4 million readers daily without taking any venture money.

Tim Huelskamp co-founded 1440 in 2017 after spending a decade in private equity, studying profitable business models and how to build flywheels. In a January 2025 interview with Simon Owens on “The Business of Content” podcast, he laid out 1440’s exact method for “pricing” its readers.

Huelskamp’s math is based on four numbers:

• 1440 sends 25 emails a month

• Open rates are north of 60%, so an average reader opens about 15 of these

• Ad revenue is around $0.05 per opened email

• Therefore, each retained reader is worth around $0.75/month

So if the company acquires new users on Facebook for around $3 each, then in four months 1440 has made its money back, and everything from Month 5 onward can be re-invested in buying more readers.

The whole system is built atop 1440’s ability to retain newly acquired users for long enough to turn them into profitable customers. As Huelskamp describes, the open rate for newsletters is a “quality metric.” Open rates in the 20s indicate that a company needs to “work on your product a little bit more” before taking it out to the market, to ensure that advertising campaigns will be successful and result in readership that sticks around long enough to pay in.

Plug a 25% open rate into this formula and you can see that a new customer that cost $3 to acquire doesn’t pay off until Month 10, assuming no churn from the most recently-acquired cohort.

That’s why 1440 didn’t really start to push ad and marketing campaigns hard until they had very solid open rates (suggesting readers loved the product and looked forward to new missives) and a year of data showing retention above 50%. Their first issue went out to just 78 readers — mostly friends and family — and the founders agreed way back then that they’d only spend time and money on the project for an open rate of 40% or above, and 5% weekly organic growth.

Finally, Huelskamp recommends comparing marketing channels based on ROI, not sticker price. Subscribers who come to 1440 from other newsletters engage at 2-3x the rate of Facebook sign-ups. So even though they cost twice as much (or even more), it basically works out evenly in terms of the “payback month” ma