CAC Payback Calculator
Works out how many months a customer takes to repay what it cost to win them.
Share sends a link that reopens these numbers. Copy details pastes the full breakdown as a list.
The formula
payback = CAC ÷ (ARPA × gross margin)
Gross margin is used because that is what is left to repay the cost once the service has been delivered. Using revenue alone makes payback look shorter than it is.
What to watch out for
Use the ARPA of the customers you are winning now, which may differ from your existing base. A yearly plan paid up front recovers cash faster than this figure suggests.
Frequently Asked Questions
How do I calculate CAC payback?
Divide CAC by monthly gross margin per customer. 600 at 50 a month and 80% margin takes 15.0 months.
Why use gross margin and not revenue?
Revenue also has to pay for delivering the service. On revenue alone the same example looks like 12.0 months.
What is a good CAC payback?
Under 12 months is a common investor rule of thumb, with longer periods more accepted for large contracts. What you can carry depends on your cash and your churn.