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.

Related terms

Customer Acquisition Cost Lifetime Value Unit Economics
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