Find out how many months it takes to earn back what you spend to win a customer. Enter CAC (or your spend and new customers), the monthly revenue per customer and gross margin. Add churn to see a churn-adjusted payback and compare the result with common benchmarks.
Last updated:
CAC input
$
$
customers
$/ month
ARPU or average subscription price.
%
%
Adds a churn-adjusted payback. 0 = ignore churn.
Enter your values to see the result.
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How to use the CAC Payback Period Calculator
Enter your CAC, or switch to "Work it out from spend" and enter sales & marketing spend and new customers.
Add the monthly revenue per customer and your gross margin.
Optionally enter monthly churn to see the churn-adjusted payback.
Read the payback period and its rating, then compare it with the benchmark table.
Check the recovery table to see the month the customer turns profitable.
Churn-adjusted: the expected cumulative gross profit after n months is GP × (1 − (1 − c)n) ÷ c, where c is monthly churn. Setting it equal to CAC gives n = ln(1 − CAC × c ÷ GP) ÷ ln(1 − c).
Example: CAC $900, $120 a month at 75% margin gives $90 of gross profit, so payback is 10 months. With 2% monthly churn, n = ln(1 − 900 × 0.02 ÷ 90) ÷ ln(0.98) = ln(0.8) ÷ ln(0.98) ≈ 11.0 months.
Payback at different CACs (per $100 of monthly gross profit)
CAC
No churn
2% monthly churn
5% monthly churn
$300
3.0 months
3.1 months
3.2 months
$600
6.0 months
6.3 months
7.0 months
$1,200
12.0 months
13.6 months
17.9 months
$1,800
18.0 months
22.1 months
44.9 months
$2,400
24.0 months
32.4 months
Never
At 5% churn the expected lifetime gross profit is $100 ÷ 0.05 = $2,000, so any CAC of $2,000 or more is never recovered on average.
Frequently asked questions
How do you calculate the CAC payback period?
CAC payback (months) = CAC ÷ (monthly revenue per customer × gross margin). With a $900 CAC, $120 monthly revenue and a 75% margin, each customer brings $90 of gross profit a month, so payback is 900 ÷ 90 = 10 months.
What is a good CAC payback period?
For SaaS, 12 months or less is the most commonly cited target. Self-serve and SMB products often reach 5 to 12 months, while enterprise companies with large contracts and low churn can accept 18 to 24 months. Over 24 months ties up a lot of cash.
Why use gross margin instead of revenue?
Only gross profit is available to pay back acquisition costs; the rest covers the cost of delivering the service. Using revenue shortens the payback and makes it look better than it is.
What is churn-adjusted payback?
The basic formula assumes the customer stays until CAC is repaid. In reality some customers cancel first. The churn-adjusted figure uses the expected gross profit of an acquired customer, which shrinks by the churn rate each month, and solves for the month when that cumulative amount equals CAC. If CAC × churn ÷ monthly gross profit is 1 or more, the average customer never pays back.
How is payback different from LTV:CAC?
Payback measures speed (how long cash is tied up), while LTV:CAC measures total return over the customer lifetime. A business can have a good 4:1 ratio and still a long payback if customers stay for many years.
How can I shorten the payback period?
Lower CAC (better targeting, referrals, higher conversion rates), raise the price or ARPU, improve gross margin, or collect annual plans upfront, which recovers CAC in cash immediately even if the accounting payback is unchanged.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.