What is CAC Payback Period?

CAC payback period is the number of months it takes to recover the cost of acquiring a customer. It measures how efficiently your sales and marketing investments convert to profitable revenue. A shorter payback period means faster ROI and more capital available for growth.

Formula
CAC / (ARPU × GM)
SaaS Target
< 12 months
Warning Zone
> 24 months

CAC Payback Calculator

Calculate how many months to recover your customer acquisition cost

Your Unit Economics

$

Total S&M spend / new customers

$
%

Typical SaaS: 70-85%

CAC Payback Period
10.7 months
Good4.3 months better than average

SaaS Growth (B-C) Benchmarks

Excellent
< 9 months
Good
9-12 months
Acceptable
12-15 months
Needs Work
> 15 months
36+ mo0 mo
Monthly Contribution
$113
3-Year LTV
$4,050

How CAC Payback is Calculated

CAC ÷ (ARPU × Gross Margin) = Payback Months
CAC
$1,200
Cost to acquire
Monthly Contribution
$113
$150 × 75%
Payback
10.7 months
$1200 ÷ $113

How to Reduce CAC Payback Period

Increase ARPU

High Impact

Upsell higher tiers, add-ons, or expand pricing

Improve Gross Margin

Medium Impact

Reduce COGS through automation and efficiency

Lower CAC

High Impact

Optimize marketing channels, improve conversion rates

Reduce Churn

High Impact

Longer customer lifetime extends value beyond payback

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. Formula: CAC / (ARPU × Gross Margin). A shorter payback means faster return on acquisition investment.
What is a good CAC payback period for SaaS?
For SaaS companies: Under 12 months is excellent, 12-18 months is good, 18-24 months is acceptable for enterprise. Beyond 24 months signals unit economics problems and may require strategic changes.
How do I calculate CAC?
CAC = Total Sales & Marketing Spend / Number of New Customers Acquired. Include salaries, advertising, tools, and overhead. Calculate over a consistent period (monthly or quarterly).
Why does gross margin matter in CAC payback?
Gross margin determines how much of each revenue dollar contributes to recovering CAC. A 70% margin means only $0.70 of each dollar goes toward payback. Lower margins extend payback significantly.
What if my CAC payback is too long?
If payback exceeds 24 months: (1) Increase prices or ARPU through upsells, (2) Reduce CAC by optimizing marketing channels, (3) Improve gross margin through automation, (4) Focus on higher-value customer segments.
Optifai Research Team

Optifai Research Team

Verified

SaaS Metrics & Unit Economics | 500+ B2B companies analyzed | Published benchmarks

Last updated: November 26, 2025
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Related Terms

CAC Payback PeriodLTV (Customer Lifetime Value)CPL (Cost Per Lead)Magic Number