CAC payback is how many months of margin it takes to recoup the cost of acquiring a customer — CAC divided by monthly revenue times gross margin. Shorter payback means faster, safer growth.
The example
$1,500 CAC, $200/mo at 80% margin.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | Monthly margin | 160 |
| 3 | 1500 ÷ 160 | → 9.4 mo |
The formula
The formula:
How it works
How it works:
- Monthly gross margin per customer = monthly revenue × gross margin %.
- Divide CAC by that margin for the months to recoup the acquisition cost.
- Shorter payback frees cash sooner — SaaS benchmarks often target under 12 months.
- Use gross margin, not revenue: you only recover the margin, not the full price.
Payback gates how fast you can grow. A long payback ties up cash in each customer before you recoup it, capping how many you can acquire without funding. Cutting CAC or improving margin both shorten payback — modeling them in the sheet shows which lever lets you grow faster on the same cash.
Try it: interactive demo
CAC, monthly revenue, gross margin.
Variations
Monthly margin
Per customer:
On revenue (no margin)
Simpler, less accurate:
Payback in years
Divide by 12:
Pitfalls & errors
Use margin, not revenue. You recoup gross margin per month, not the full fee.
Shorter is better. Long payback ties up cash and caps growth.
Zero margin. No margin means CAC is never recovered (#DIV/0! or infinite).
Practice workbook
Frequently asked questions
How do I calculate CAC payback period in Excel?
Why use gross margin instead of revenue?
What's a good CAC payback?
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