CAC payback

How many months until a customer pays you back?

Payback period tells you how long your cash is tied up in each new customer. Investors love it because it decides how fast you can grow without running out of money.

The move

Payback (months) = CAC ÷ monthly gross profit per customer. Monthly gross profit = ARPA × gross margin.

Worked example

CAC $1,200, ARPA $100/mo, 80% margin

  1. Monthly gross profit: $100 × 80% = $80
  2. $1,200 ÷ $80 = 15 months
  • Under 12 months is generally great for SMB SaaS. 18–24 is common for enterprise.
  • If payback is longer than the average customer lifetime, you lose money on every customer.