marketing
CAC Payback Period
Months it takes to recover CAC from gross profit. The speed metric for unit economics.
Definition
CAC payback period is how many months of gross profit it takes to recover the cost of acquiring a customer. Formula: CAC / (Monthly Revenue per Customer x Gross Margin). $3K CAC, $200/month revenue, 70% margin = $140/month gross profit = ~21 months payback. Healthy benchmark depends on the business: under 12 months for SMB SaaS, under 18 months for mid-market, under 24 months for enterprise. Longer payback periods consume more cash and create more risk - they're acceptable only if LTV is large and customers are clearly sticky.
In your business
- →Calculate quarterly - rising payback is an early warning of unit economics deterioration
- →Under 12 months is healthy for SMB; longer is acceptable only with high LTV and low churn
- →Faster payback = lower risk = more freedom to scale acquisition spend