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CAC Payback Period Calculator

Months to earn back customer acquisition cost from gross profit, with the slower churn-adjusted payback and benchmarks for your segment.

Updated · By Niraj Kumar · 3 sources

Revenue and customers

$

ARPU $100 a month.

Retention

%
0%15%

Customers who cancel each month. 2% a month is 22% a year.

%
−2%5%

Upgrades and added seats less downgrades, from customers who stay. Gives NRR of 92%.

Margin and acquisition

%
0%100%

Revenue left after hosting, support, payment fees and third-party APIs.

$

Ads, tools and the pay of sales and marketing staff. CAC $733.

Cash

$
$

R&D, G&A, rent: everything outside cost of revenue and sales and marketing.

LTV settings

%

What future profit is worth today. 0 for an undiscounted LTV.

months

How long a customer's profit counts. 60 is common.

CAC payback period9.4 monthsUnder 12 months: efficient
Customer lifetime value
$3,091
60 months, discounted 10%; simple LTV $3,900
CAC
$733
$22,000 ÷ 30 new customers
LTV:CAC
4.2:1
Healthy, at or above 3:1
Net revenue retention
92%
Gross retention 78%; 22% of customers lost a year
Implied valuation
$2,457,000
3.4× ARR on 49% growth; Rule of 40: 16
Cash runway
Default alive
Burning $20,200 a month; profitable in month 11, before the cash runs out
What if you pulled one lever?Each row changes one input and leaves the rest as entered. Valuation moves in steps as growth, churn and NRR cross a band.
ChangeLTVLTV:CACPaybackValuationBreak-even
As entered$3,0914.2:19.4 months$2,457,000Month 11
Cut monthly churn by 1 point+$953+1.30–+$1,053,000−2 mo
Add 0.5 points of monthly expansion+$417+0.57––−1 mo
Acquire customers 10% cheaper–+0.47−0.9 mo–−1 mo
Raise gross margin by 5 points+$198+0.27−0.6 mo+$63,000−2 mo
One customer: gross profit less CACCAC not yet earned backProfit after CAC
-$750-$500-$250$0$250$500Payback, month 9.703691215

Expected profit from a new customer, allowing for the chance they churn and for expansion. Simple payback ignores churn: 9.4 months.

Cash in the bank, month by monthShort of cashCash in the bank
$0$250,000$500,000$750,000$1,000,000$1,250,000061218243036

Burning $20,200 a month; profitable in month 11, before the cash runs out. New customers join at today's ARPU; costs stay flat.

Against SMB SaaS benchmarksSmall-business customers, contracts under about $5,000 a year. Checked October 11, 2026.
MetricYoursMedianStrongWhere you sit
Monthly churn2%2%1%Above median
Net revenue retention92%92%102%Above median
Gross margin78%75%82%Above median
CAC payback9.4 months12.0 months8.0 monthsAbove median

What is the CAC payback period formula?

CAC payback = CAC ÷ (ARPU × gross margin). Here $733 ÷ ($100 × 78%) = 9.4 months. Allowing for customers who churn before then, the expected payback stretches to 9.7 months. Under 12 months is efficient; over 24 is cash-hungry.

ARPU = MRR ÷ customers; gross profit per customer g = ARPU × gross margin; annual churn = 1 − (1 − c)^12; NRR = ((1 − c) × (1 + e))^12; GRR = (1 − c)^12; simple LTV = g ÷ c; LTV = Σ g × q^t for t = 0 … H − 1, q = (1 − c)(1 + e) ÷ (1 + d)^(1/12); CAC = sales and marketing ÷ new customers; payback = CAC ÷ g; LTV:CAC = LTV ÷ CAC; cash(t+1) = cash(t) + MRR(t) × margin − sales and marketing − other costs; runway = months until cash < 0

This page uses the same method as the SaaS Unit Economics Calculator, which explains each term and assumption in full.

Worked example

An SMB SaaS on $60,000 MRR from 600 customers at $100 a month, adding 30 a month on $22,000 of sales and marketing, with 2% monthly churn, 1.3% monthly expansion, 78% gross margin, $45,000 of other monthly costs and $600,000 in the bank.

  1. 1CAC: $22,000 ÷ 30 = $733
  2. 2Gross profit a month: $100 × 78% = $78
  3. 3Payback: $733 ÷ $78 = 9.4 months
  4. 4Churn-adjusted: profit weighted by the 2% monthly chance of cancelling crosses CAC at 9.7 months

9.4 months simple, 9.7 months allowing for churn: under 12 months: efficient.

Frequently asked questions

Should CAC payback use revenue or gross margin?

Gross margin. Revenue payback, CAC ÷ ARPU, is quicker to quote but ignores hosting, support and payment costs, so it flatters by 20 to 30%. Most investor benchmarks, including the ones on this page, are gross-margin-adjusted. Check which one a benchmark uses before comparing.

Why is my churn-adjusted payback longer?

Simple payback assumes every customer stays until CAC is recovered. Some cancel first, so the average customer takes longer, and with high churn may never pay back. If the gap between the two is large, fixing early churn, in onboarding and the first few months, will shorten payback more than cutting CAC.

Sources

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