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CAC Payback Period Calculator

Estimate how many months it takes to recover CAC (months to recover CAC) using gross profit.

CAC payback period tells you how many months it takes to earn back CAC from monthly gross profit. It is one of the fastest ways to assess cash efficiency for subscription businesses.

When people search "months to recover CAC", they usually mean this payback period: CAC divided by gross profit per month.

Payback is a cash-efficiency lens, not a profitability guarantee. Pair it with churn and margin assumptions.

Prefer an explanation- Read the guide.
Need definitions- Browse the glossary.
CAC Payback Period (Months to Recover CAC): definition, formula, benchmarksARPA: how to calculate Average Revenue Per Account (formula + examples)Pipeline coverage and sales cycle math: set realistic targets (and avoid sandbagging)Unit economics dashboard: LTV, CAC, payback, and what to improve
 
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$
 
%
Used to compute discounted payback. Set 0 to disable.
%
Used to compare payback vs expected lifetime (1 / churn).
%
Set 0 to disable target CAC and ARPA guidance.
Tip: you can type commas (e.g., 10,000).

Example

Using the default inputs, the result is:
3.1 months
CAC
$500
ARPA per month
$200
Gross margin
80%
Annual discount rate (optional)
0%
Monthly churn (optional)
3%
Target payback (months, optional)
12

How to calculate

  1. Choose a segment (channel/plan/geo) and a time window (usually monthly).
  2. Estimate ARPA per month for the segment.
  3. Choose gross margin for the same revenue base (product gross margin is common).
  4. Compute gross profit per month: ARPA * gross margin.
  5. Divide CAC by gross profit per month to get payback months.
  6. Optionally compare payback to expected lifetime (1 / churn) to sanity-check viability.

Formula

Payback (months) = CAC / (ARPA * Gross Margin)
  • ARPA and gross margin remain stable over the payback period.

Benchmarks

  • Many B2B SaaS teams target around 6-18 months depending on stage and burn.
  • Shorter payback reduces risk when channels fluctuate.
  • Long payback can work if retention is strong and expansion revenue is significant.

FAQ

Should payback include onboarding costs-
If onboarding costs are significant and variable per customer, include them in CAC so payback reflects full acquisition cost.
How do I calculate months to recover CAC-
Compute gross profit per month (ARPA * gross margin), then divide CAC by gross profit per month. The result is the CAC payback period in months.

Common mistakes

  • Using revenue instead of gross profit (payback should reflect contribution).
  • Ignoring churn: long payback + high churn can be unprofitable.
  • Comparing payback across segments without consistent ARPA and margin definitions.
  • Treating cash collected upfront as payback without matching gross margin timing.

How to interpret

How to calculate CAC payback
  • Pick a time window (usually month) and a segment (plan/channel/geo).
  • Compute gross profit per month: ARPA * gross margin.
  • Compute payback months: CAC / gross profit per month.
  • Compare across channels and cohorts, not just blended averages.
How to interpret payback
  • Shorter payback improves cash efficiency and reduces risk.
  • Compare payback by channel - some channels are slow but scalable.
  • Pair with churn: long payback + high churn is dangerous.

Related calculators

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Calculate Customer Acquisition Cost (CAC) from total acquisition spend and new customers.
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Fully-loaded CAC Calculator
Calculate fully-loaded CAC by including paid spend plus sales & marketing costs (salaries, tools, and other acquisition costs).
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LTV Calculator
Estimate customer Lifetime Value (LTV) using ARPA, gross margin, and churn rate.
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LTV Sensitivity Calculator
See how gross profit LTV changes as churn and gross margin vary (simple 3x3 sensitivity).
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LTV:CAC Calculator
Compute LTV:CAC ratio and CAC payback using ARPA, gross margin, churn, and CAC.
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CAC Payback Sensitivity Calculator
See how CAC payback months change as ARPA and gross margin vary (simple 3x3 sensitivity).

Quick checks

  • Keep time units consistent (monthly vs annual) across inputs and outputs.
  • Segment by cohort/channel/plan before trusting a blended average.
  • Use the related guide to avoid common definition and denominator mismatches.