CAC Payback Period

Months = CAC / (ARPU × gross margin). Time to recover acquisition cost.

Inputs

Result

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How to use this calculator

  • Enter CAC + ARPU + gross margin.

About this calculator

CAC payback period = months to recover the customer acquisition cost via gross-margin-adjusted recurring revenue. Best-in-class SaaS: <12 months. 12-24 months acceptable. >24 months = burning cash on growth. PMM math: CAC payback = CAC / (ARPU × gross margin). Used to gauge cash efficiency, especially for venture-funded startups burning toward profitability. Source: David Skok SaaS metrics framework.

Frequently asked

Why GM in formula?+
Pure revenue includes CoGS. GM-adjusted shows actual cash you can use to recoup CAC.
Industry benchmarks?+
B2B SaaS: <12mo good, >18mo concerning. PLG / consumer: <6mo expected.
Cash vs. P&L payback?+
Cash payback uses gross margin × monthly billings. P&L payback considers full P&L including OpEx (rare).
Effect of upsells?+
Net revenue retention >100% effectively shortens payback (account expands while paying).
Annual contract impact?+
Upfront annual payment shortens cash payback to 1-2 weeks. Use monthly equivalent for comparison.

Related calculators

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LTV = ARPU × gross margin × lifetime. Foundational SaaS unit economics.
Churn Rate Calculator
Monthly churn = customers lost / start customers. Annualized: 1 − (1−monthly)^12.
Gross Margin
Gross margin % = (Revenue − COGS) / Revenue. Profit before operating expenses.
Contribution Margin
CM = Revenue − Variable Costs. CM ratio = CM / Revenue.
MRR / ARR Growth Projection
MRR with monthly growth + churn → 12-month projection. ARR = MRR × 12.
CAC vs LTV Ratio
LTV / CAC ratio. Healthy SaaS: 3:1+; under 1:1 burns money.

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