What is CAC Payback?
CAC Payback Period is the time it takes for a customer to generate enough profit to recover the cost of acquiring them. It's the most important economic metric for subscription businesses because it determines whether you can scale profitably.
The Simple Formula
Why investors care: If it takes 12 months to recover your acquisition cost, you need customers to stay at least that long to be profitable. Shorter payback periods mean faster scaling and lower risk.
Calculate Your CAC Payback Period
Enter your business metrics below to calculate your CAC payback period. This is the calculation investors will do when evaluating your business.
Monthly Gross Profit per Customer
CAC Payback Period
Why Payback Period Matters to Investors
Investors evaluate businesses on three critical dimensions: growth, profitability, and risk. CAC payback period touches all three.
Growth
Short payback periods mean you can reinvest profits faster. Every dollar you spend on acquisition returns profit sooner, enabling compound growth.
Profitability
Long payback periods mean customers aren't profitable for a year or more. This creates cash flow problems and limits your ability to scale.
Risk
If payback takes 18 months but customers only stay 12 months on average, you're losing money on every acquisition. This is a high-risk business.
CAC Payback Benchmarks by Industry
SaaS Companies
Other Subscription Models
Note: These are general benchmarks. Your specific payback period depends on your pricing, margins, churn rate, and acquisition costs. Use our calculator to find your number.
How to Improve Your CAC Payback Period
1. Increase Gross Margins
Higher margins mean more profit per customer, shortening payback time.
2. Reduce Customer Acquisition Cost
More efficient acquisition directly improves payback period.
3. Increase ARPU
Higher revenue per customer improves payback without affecting costs.
Common CAC Payback Mistakes
Not Including All Acquisition Costs
Many businesses only count direct ad spend. Don't forget sales salaries, marketing tools, content creation, and overhead allocation.
Using Gross Revenue Instead of Profit
Payback should be calculated on profit, not revenue. A customer generating $100/month revenue but costing $80/month to serve has very different economics.
Ignoring Churn's Impact
High churn means customers don't stay long enough to pay back their acquisition cost. Always factor churn into your LTV calculations.
Not Monitoring Changes Over Time
CAC payback isn't static. As you scale, CAC typically increases while margins may change. Track this metric monthly and understand what drives changes.
Calculate Your CAC Payback Period
Use our CAC payback calculator to understand your customer economics and see how different factors affect your payback period.