Formula
CAC payback = CAC / (ARPA × gross margin)
CAC payback period
CAC payback period is the number of months of gross profit needed to recover what was spent acquiring a customer.
Benchmark
Under 12 months is generally considered healthy for SaaS.
Payback is the cash-flow view of acquisition. Until a customer has paid back their acquisition cost, growth consumes runway rather than creating it.
For a company without deep reserves this constrains growth more than the LTV:CAC ratio does, because it is denominated in months rather than in a multiple.
Related terms
Keep this number live
Plainhub computes cac payback period from money you record in plain words, so it is current when you need it rather than the night before a board meeting.
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