The Need for Two Types of Payback Period Calculations
Tomasz Tunguz
NOVEMBER 6, 2021
Imagine an AE closes two contracts for $100k ARR. The contracts are identical twelve month contracts except for the payment terms. Contract A requires annual prepayment - all the cash will be paid tomorrow. Contract B relaxes payment terms to monthly payment, 12 monthly installments for the next year. Is the payback period for each contract the same?
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