What is the payback period?

Payback period — the time it takes for investments in a project or product to be fully recovered through the income received or cost savings.

In simpler terms, it is the time needed to recover the invested money.

For example, if you invest 100,000 rubles in product development, and it generates 25,000 rubles profit per year, then the payback period will be 4 years.

Calculation:

Payback period = Investments / Annual cash flow

This indicator helps assess the risk and efficiency of investments, and is especially important for decision-making in product management and finance.