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SaaS Metrics

Months to recover CAC

Months to recover CAC is another name for CAC payback period: the months of gross profit needed to earn back acquisition cost.

Updated 2026-01-23

Definition

Months to recover CAC is another name for CAC payback period: the months of gross profit needed to earn back acquisition cost.

Formula

Payback (months) ~ CAC / (ARPA * gross margin)

Example

If CAC is $6,000, ARPA is $500/month, and gross margin is 80% (0.8), payback ~ $6,000 / ($500 * 0.8) = 15 months.

How to use it

  • Compute payback using consistent time units (monthly ARPA with monthly churn).
  • Shorter payback usually improves cash flexibility and resilience.
  • Track payback by cohort to see if acquisition quality is improving.
  • Use net revenue retention to model expansion in longer payback cases.
  • Model payback with conservative margins to stress-test cash risk.

Common mistakes

  • Using revenue instead of gross profit in the denominator.
  • Ignoring expansion or contraction when payback is long.
  • Mixing CAC definitions across channels and time periods.
  • Using quarterly CAC with monthly ARPA without normalization.

Why this matters

This term matters because small changes compound in SaaS metrics. Use consistent definitions by cohort and segment so you can diagnose retention, payback, and growth quality.

Practical checklist

  • Write a 1-line definition for "Months to recover CAC" that your team will use consistently.
  • Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
  • Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
  • Use a calculator that references this term (e.g., CAC Payback Period Calculator) to sanity-check assumptions.
  • Read the related guide (e.g., CAC Payback Period (Months to Recover CAC): definition, formula, benchmarks) for context and common pitfalls.

Where to use this on MetricKit

Calculators

Guides