CAC payback period
Payback Period Calculator
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Payback = CAC ÷ (Monthly revenue × Gross margin)
How many months it takes to earn back the cost of acquiring a customer, from the gross profit they bring in each month. Under 12 months is a common rule of thumb for subscription businesses, not a hard rule.
Healthy
Payback period
8.2 mo
It takes 8.2 months to recover $320 per customer.
Monthly gross profit$39.20
First-year profit / customer$150
Frequently asked questions
- What is CAC payback period?
- CAC payback period is the number of months it takes to recover the cost of acquiring a customer from the gross profit that customer brings in. A shorter payback means you get your acquisition spend back faster. It is acquisition payback, not the capital-budgeting payback used for one-off investments.
- How do you calculate CAC payback period?
- Divide customer acquisition cost by the monthly gross profit per customer, where monthly gross profit is monthly revenue per customer times gross margin. For example, a 320 CAC against 49 monthly revenue at an 80% margin is 39.20 monthly gross profit, so payback is about 8.2 months.
- What is a good CAC payback period?
- Under 12 months is a common rule of thumb for subscription businesses, but it is a convention, not a law. Low-ticket, high-volume products often aim well under 12 months, while higher-value enterprise deals can justify longer. Judge it against your cash position and growth plans.
- Why does gross margin matter to payback?
- Because you recover acquisition cost out of gross profit, not revenue. Ignore margin and you overstate how fast a customer pays back. At a 49 monthly price, an 80% margin returns 39.20 a month toward CAC, while a 50% margin returns only 24.50, stretching the payback.