CAC Payback Period Calculator
Calculate how long it takes to recover your customer acquisition cost. The faster the payback, the more efficient your growth.
Total cost to acquire one customer
Average revenue per customer per month
Revenue minus cost of goods sold
Average customer lifespan in months
Understanding CAC Payback Period
CAC Payback Period measures how long it takes to recover the cost of acquiring a customer. It's a critical metric for understanding cash flow efficiency and growth sustainability.
What is a Good Payback Period?
Less than 12 months
Excellent. You recover CAC within a year, enabling faster reinvestment in growth.
12-18 months
Good. Standard for many B2B SaaS companies with annual contracts.
18-24 months
Acceptable for enterprise sales with long contracts and high LTV.
24+ months
Risky. Requires very long customer retention to be profitable.
Why Payback Period Matters
- Cash Flow: Shorter payback means faster cash recovery for reinvestment.
- Risk Assessment: Longer payback increases exposure to churn risk.
- Growth Planning: Determines how aggressively you can scale acquisition.
- Investor Metrics: VCs closely evaluate payback period for growth-stage companies.
How to Reduce Payback Period
- Lower CAC: Optimize acquisition channels for efficiency.
- Increase ARPU: Raise prices or upsell to existing customers.
- Improve margins: Reduce cost of goods sold or service delivery costs.
- Annual contracts: Collect cash upfront to offset acquisition costs.
- Fast onboarding: Get customers to full value quickly to prevent early churn.
Payback Period vs. LTV:CAC Ratio
While both metrics measure acquisition efficiency, they serve different purposes:
- LTV:CAC Ratio: Measures total return on acquisition investment over customer lifetime.
- Payback Period: Measures speed of return, impacting cash flow and reinvestment capacity.
A company could have a great LTV:CAC ratio but a long payback period, requiring significant capital to fund growth.
Want Faster CAC Recovery?
Our pay-per-meeting model means you pay only when qualified prospects show up. Faster payback, better cash flow.
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