CAC Payback Period
The number of months it takes to recover the cost of acquiring a customer.
What it means
CAC Payback Period measures how long it takes for a customer's subscription payments to cover the cost of acquiring them. If your CAC is $600 and your average monthly subscription is $50, your payback period is 12 months. Shorter payback periods mean faster capital efficiency and less cash burn.
Formula
Payback Period = CAC ÷ (ARPU × Gross Margin)
Why it matters
Cash is king for startups. A 6-month payback period means you recover acquisition costs twice as fast as a 12-month one, freeing up cash to reinvest in growth. Investors look for payback periods under 12 months for SMB SaaS and under 18 months for enterprise.
What is CAC payback period?
It's the number of months it takes for a customer's payments to cover the cost of acquiring them. A shorter payback period means faster return on your marketing investment.
What is a good payback period for SaaS?
Under 12 months for SMB SaaS and under 18 months for enterprise SaaS is generally considered healthy.
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