Businesssaas

CAC Payback Period Calculator

How long a customer takes to repay what they cost to win. Cash-flow reality that the LTV:CAC ratio hides. A 4× ratio over five years still starves a business of cash.

Also called: months to recover cac, cac payback period.

Months to pay back CAC

12.5

12.5 months of gross profit to recover the $50,000 it cost to acquire this customer.

Gross profit per month

$4,000.00

How this is calculated

Method and background

How this is calculated

Acquisition cost divided by the monthly gross profit that customer generates. It is the cash question rather than the profitability question, and the two diverge sharply when lifetimes are long: a healthy ratio with a thirty-month payback still means thirty months of funding growth out of somewhere else.

payback_months = cac / (arpu * gross_margin)

GM: Gross margin as a decimal (decimal)

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

12.5 months

Customer acquisition cost: $50,000.00
Monthly revenue per customer: $5,000.00
Gross margin: 80%

Months to pay back CAC12.5

arithmetic identity

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zero margin never pays back

Customer acquisition cost: $50,000.00
Monthly revenue per customer: $5,000.00
Gross margin: 0%

Months to pay back CAC0

degenerate case: guarded division rather than Infinity

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zero CAC pays back instantly

Customer acquisition cost: $0.00
Monthly revenue per customer: $5,000.00
Gross margin: 80%

Months to pay back CAC0

boundary

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