CAC Payback Period is the number of months it takes for the gross profit from a customer to recover the cost of acquiring them.
What is CAC Payback Period?
Payback period measures how capital-efficient your growth is. The faster you recover CAC, the sooner that cash can fund the next customer — which matters enormously when capital is expensive.
How to calculate CAC Payback Period
Worked example
CAC is $800, ARPU is $200/mo, gross margin is 80%. Payback = $800 ÷ ($200 × 0.80) = $800 ÷ $160 = 5 months.
What's a good CAC Payback Period?
Under 12 months is healthy for most SaaS; under 6 months is excellent. Beyond 18–24 months, growth becomes very capital-intensive.
Frequently asked questions
Should payback use revenue or gross profit?
Gross profit. Using raw revenue understates the true payback because it ignores the cost of serving the customer.
Why does payback period matter if LTV:CAC is healthy?
LTV:CAC can look great while payback is slow. Slow payback ties up cash for longer and increases risk if a customer churns early — so investors watch both.
Related metrics
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