What is a good CAC payback?

Many SaaS benchmarks target under 12 months; faster is better, but depends on margins and retention.

Should I use revenue or gross profit?

Use gross profit. Revenue-only can underestimate payback if your COGS is significant.

Does this include churn?

No. High churn shortens customer lifetime and can make a “good” payback look worse. Pair this with LTV.

What about sales cycle length?

This assumes revenue starts immediately. If ramp is slow, add that to the payback window manually.

Can I include onboarding costs?

Yes—roll all acquisition/onboarding expenses into CAC for an accurate payback.

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CAC Payback Calculator

See how many months it takes to recover customer acquisition cost (CAC) based on monthly revenue and gross margin.

Results

Monthly gross profit per customer: $56
Payback period (months): 8.93
Payback period (days, approx.): 267.86

How to use this calculator

Enter CAC per customer.
Enter average monthly revenue per customer and gross margin percentage.
Review monthly gross profit and payback time in months and days.

Inputs explained

CAC: All-in cost to acquire one customer (ads, sales, onboarding, incentives).
Monthly revenue: Average recurring revenue from a customer per month.
Gross margin: Revenue minus direct costs; higher margin shortens payback.

How it works

Monthly gross profit = Monthly revenue × Gross margin.

Payback months = CAC ÷ Monthly gross profit. Days is months × 30 for a quick approximation.

Formula

Gross profit = Revenue × Margin
Payback months = CAC ÷ Gross profit
Payback days ≈ Payback months × 30

When to use it

Checking if CAC payback meets board/VC targets (e.g., <12 months).
Comparing channel CACs against the same ARPU and margin.
Modeling pricing or margin improvements to hit a target payback window.

Tips & cautions

Use gross profit, not revenue, to avoid overstating performance.
If churn is high, combine this with LTV to ensure customers stay long enough to pay back.
For annual plans, convert to monthly equivalents or adjust revenue to reflect collections timing.
Does not model churn, discounts, or onboarding time; assumes revenue starts immediately.
No cohort decay or expansion revenue; use LTV models for full-unit economics.
Days uses a simple 30-day month approximation.

Worked examples

$500 CAC, $80 ARPU, 70% margin

Gross profit = $80 × 70% = $56
Payback months ≈ $500 ÷ $56 ≈ 8.9 months
Payback days ≈ 8.9 × 30 ≈ 267 days

$700 CAC, $120 ARPU, 60% margin

Gross profit = $120 × 60% = $72
Payback months ≈ $700 ÷ $72 ≈ 9.7 months
Payback days ≈ 292 days

Deep dive

Calculate CAC payback by entering acquisition cost, monthly revenue, and gross margin to see monthly gross profit and months to recover CAC.

Use it to validate marketing efficiency targets, compare channels, and test pricing or margin changes.

FAQs

What is a good CAC payback?: Many SaaS benchmarks target under 12 months; faster is better, but depends on margins and retention.
Should I use revenue or gross profit?: Use gross profit. Revenue-only can underestimate payback if your COGS is significant.
Does this include churn?: No. High churn shortens customer lifetime and can make a “good” payback look worse. Pair this with LTV.
What about sales cycle length?: This assumes revenue starts immediately. If ramp is slow, add that to the payback window manually.
Can I include onboarding costs?: Yes—roll all acquisition/onboarding expenses into CAC for an accurate payback.

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