The CAC Payback Period measures how long (usually in months) it takes a company to recover the cost of acquiring a customer through the gross profit generated from that customer.
It’s a critical SaaS metric for assessing capital efficiency. The shorter the payback period, the faster your company recoups its customer acquisition investment.
You can calculate CAC Payback Period by dividing Customer Acquisition Cost (CAC) by the monthly gross profit per customer.
CAC = Total Acquisition Costs ÷ New Customers Acquired
Monthly Gross Profit = Monthly Revenue per Customer × Gross Margin %
CAC Payback Period (months) = CAC ÷ Monthly Gross Profit per Customer
Or
Payback Period = CAC ÷ (ARPU×Gross Margin %)
| Stage | Benchmark |
|---|---|
| Early-Stage SaaS | <12 months is ideal |
| Growth-Stage SaaS | 12–18 months is acceptable |
| Mature Enterprises | <24 months may be tolerable, especially in high-LTV markets |
Discover how to optimize your CAC Payback Period and improve capital efficiency. Just write to us at info@diggrowth.com — we’ll get back to you promptly.
The CAC Payback Period indicates how long your business must wait before a new customer becomes profitable. A shorter period means faster ROI and better cash flow, i.e., critical for startups or high-growth SaaS companies needing to reinvest quickly.
CAC Payback tells you how fast you recover the cost of acquiring a customer, while LTV:CAC tells you how much profit you make over the customer’s entire lifetime. Both are essential: payback for cash efficiency, LTV:CAC for long-term profitability.
To reduce your CAC Payback Period, focus on both sides of the equation: lower your acquisition costs and increase the monthly profit per customer. This can be achieved by refining your targeting to attract higher-intent leads, optimizing ad spend, improving conversion rates, and streamlining your sales process. On the revenue side, boost ARPU through upsells, pricing adjustments, or faster onboarding. Improving gross margins, by reducing delivery or service costs, also directly shortens the time it takes to recoup your investment.