CAC Payback Period
Definition
CAC Payback Period: CAC payback period is the number of months required to recover the cost of acquiring a customer. It's calculated by dividing CAC by the monthly gross profit per customer. Shorter payback periods mean faster capital efficiency and less cash needed to fund growth.
Example Usage
“We reduced our CAC payback from 18 months to 10 months by improving activation and pricing.”
Common Misconceptions
Related Terms
Customer Acquisition Cost
Customer Acquisition Cost (CAC) is the total cost of acquiring a new customer, including marketing, sales, and onboarding expenses. CAC is calculated...
Customer Lifetime Value
Customer Lifetime Value (LTV) is the total revenue a business can expect from a single customer account over the entire relationship. LTV is calculate...
Gross Margin
Gross margin is revenue minus the cost of goods sold (COGS), expressed as a percentage of revenue. For SaaS companies, COGS typically includes hosting...
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