CAC Payback Period (Customer Acquisition Cost Payback Period) measures how long it takes for a business to earn back the money it spent to acquire a new customer. In simple terms, it answers: How many months until this customer “pays for themselves”?

It’s a key metric for SaaS and subscription-based businesses, especially when growth and cash flow need to be balanced.

How it works:
You calculate it by dividing your Customer Acquisition Cost (CAC) by the Monthly Gross Margin from that customer.

Formula:
CAC Payback Period = CAC / Monthly Gross Margin

Why it matters:
A shorter payback period means your business recovers its investment faster, which is great for cash flow and scalability. A longer payback period can signal risk — especially if customers churn before they become profitable.

Example:

If it costs you €1,200 to acquire a new customer and you make €200/month in gross margin from them, the CAC Payback Period is 6 months. That means it’ll take half a year before that customer starts generating profit.

Other terms

Conversion Rate

Conversion Rate tracks the percentage of visitors who complete a goal, like signing up or purchasing—key to measuring marketing effectiveness.

Churn Rate

Churn Rate measures the percentage of customers who cancel or stop using a service, indicating retention performance and growth health.

Call-to-Action (CTA)

A Call-to-Action (CTA) is a prompt that encourages users to take a specific action, such as downloading a guide or booking a demo.

Customer Lifetime Value (CLV)

Customer Lifetime Value (CLV), or LTV, estimates how much revenue a business earns from a customer throughout the entire relationship.

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