Efficiency Terms Efficiency
CAC Payback Period
CAC Payback Period: Time required to recover customer acquisition cost.
Related Terms
Other definitions in Efficiency Terms:
CAC (Customer Acquisition Cost)
Total cost to acquire a new customer.
Marketing CAC
Marketing-only portion of CAC (excludes sales costs).
LTV (Customer Lifetime Value)
Total profit expected from a customer over their lifetime. Calculated with gross margin.
LTV:CAC Ratio
Ratio of customer lifetime value to acquisition cost.
Gross Margin
Revenue minus cost of goods sold, as percentage of revenue.
Rule of 40
ARR Growth Rate (YoY %) + EBITDA Margin (%).
Magic Number
Sales efficiency metric: QoQ ARR growth divided by prior quarter S&M spend.
Burn Multiple
Capital efficiency metric: Net burn divided by net new ARR. Popularized by David Sacks.
Related Metrics
CAC Payback Period
The number of months required to recover the cost of acquiring a customer. Also called "Months to Recover CAC" or "Time to Recover CAC."
Core
CAC Payback Period
The number of months required to recover the cost of acquiring a customer. Also called "Months to Recover CAC" or "Time to Recover CAC."
Finance