CAC Payback Period
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."
Also known as: CAC
Formula
CAC Payback = CAC / (ARPA × Gross Margin)Benchmarks
- Under 12 months: Good, investor-friendly target (best-in-class)
- 12-18 months: Acceptable (Median 2024: 18-20 months)
- 18-24 months: Concerning for most segments
- Over 24 months: Requires attention
What It Tells You
How quickly customers become profitable. Critical for cash management and determining sustainable growth rate.
Related Metrics
Connected in the GASP relationship graph.
Upstream: what drives this
- CAC component of CAC Payback Period (Core)
- ARPA component of CAC Payback Period (Core)
- Gross Margin component of CAC Payback Period (Core)
Downstream: what this drives
- CAC Payback Period measures Customer (Entity)