Definition
The number of months required for a customer's gross margin to repay their acquisition cost.
Formula
CAC / (Monthly revenue per customer x Gross margin %)
How to measure
Divide CAC by the monthly gross profit generated per customer to find how many months of margin are needed to break even on acquisition.
Why track it
A shorter payback period frees up cash faster to reinvest in more acquisition, which matters most for cash-constrained early-stage companies.
Example
A $400 CAC against $80 in monthly gross profit per customer produces a 5-month payback period.
FAQ
- What is CAC Payback Period?
- The number of months required for a customer's gross margin to repay their acquisition cost.
- How do you calculate CAC Payback Period?
- CAC / (Monthly revenue per customer x Gross margin %)
- Why track CAC Payback Period?
- A shorter payback period frees up cash faster to reinvest in more acquisition, which matters most for cash-constrained early-stage companies.