CAC Payback Period

Payback period shows how quickly gross margin from a customer repays acquisition cost. It connects growth pace to cash efficiency.

Payback period is the number of months required for gross margin from a customer's revenue to cover CAC.

Segment payback by plan and channel. Shorter payback improves runway and reduces financing pressure, especially in paid acquisition motions.

Payback period is the number of months required for gross margin from a customer's revenue to repay acquisition cost. Shorter payback improves cash efficiency and reduces funding needs. Segment payback by plan, channel, and cohort to see where to invest and where to optimize.

Use margin and net of refunds.

Divide CAC by monthly gross margin contribution. Use cohorts for precise cash flow timing.

$500 CAC, $40 ARPU, 80% margin → 15.6 months.

Walk through a CAC, ARPU, and margin example to compute months to repay.

Ignoring gross margin, using revenue instead of contribution, or not accounting for refunds will mislead decisions.

SMB ≤ 12 months; mid‑market ≤ 18; enterprise 18–24 months can be acceptable.

SMB ≤ 12 months, mid‑market ≤ 18, enterprise can be longer depending on ACV and margins.

Report median payback and segment by plan and acquisition channel to target improvements.

Payback ties to CAC and CLTV and impacts runway and fundraising timing.