CAC Payback Period

Also called Payback Period

How long it takes for a customer to pay back what you spent to acquire them. Measured in months of their gross profit against your CAC.

Payback (months) = CAC / (monthly revenue per customer x gross margin)

Why it matters

Payback period is really a cash-flow question: the longer it is, the more cash you must front to grow. Under 12 months is healthy for most SaaS, and it often matters more day to day than the LTV to CAC ratio.

For example

It costs 30,000 to acquire a customer who pays 5,000 a month at 60 percent gross margin, so the CAC payback period is 10 months.

Go deeper

CAC Payback Period: The Cash Flow Metric That Gates Your Growth Speed RoadmapOne · article Why a customer can be worth far more than they cost and the business can still run out of cash, because profit and cash are two different clocks. Open roadmap.one →

Related terms

Also in Starting Up

See how founders actually handle this on Money, pricing and metrics, part of the Starting Up hub.

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