Payback Period
Payback period is how long it takes to recover the cost of acquiring a customer (CAC). Calculated as CAC divided by monthly profit per customer.
What Is CAC Payback Period? Formula and Healthy Benchmarks
Formula: Payback Period = CAC / (Monthly Revenue per Customer - Monthly Cost to Serve). Example: CAC is $600, customer pays $100/month, costs $20/month to serve. Payback = $600 / $80 = 7.5 months. Under 12 months is healthy for most SaaS. Under 6 months is excellent. Long payback periods strain cash flow and limit growth.
Examples
CAC is $600 per customer. The customer pays $100 a month and costs $20 a month to serve, leaving $80 of monthly margin. Payback period is $600 divided by $80, which is 7.5 months. Anything under 12 months is considered healthy for most SaaS businesses.