CAC Payback Period Calculator
How many months of gross profit does it take to earn back what you spent to acquire a customer? Get the standard payback period and a churn-adjusted version for a whole cohort.
Formulas
The standard formula is the “months to recover CAC” in David Skok, “SaaS Metrics 2.0 – A Guide to Measuring and Improving what Matters” (For Entrepreneurs). Skok’s guideline is to recover CAC in less than 12 months; he writes that profitability is “anemic” when the time to recover CAC extends beyond 12 months, and that many of the best SaaS businesses recover it in 5–7 months.
The churn-adjusted figure is a direct consequence of the same inputs: out of each acquired customer, only (1 − c)t is still paying in month t+1, so the cohort earns back its CAC later than the standard formula suggests, and never if churn is high enough. This page derives it explicitly so you can check it; it is not a separately published benchmark.
FAQ
Why use gross margin in the payback?
Revenue that goes straight to hosting, LLM tokens or payment fees does not repay acquisition spend. Using revenue alone makes payback look shorter than it is.
Why is the churn-adjusted payback longer?
The standard formula assumes every acquired customer stays until CAC is recovered. In reality some leave each month, so the remaining customers must cover the whole acquisition cost of the cohort.
What does “never pays back” mean?
With these numbers the total gross profit a cohort will ever generate (m ÷ c) is smaller than its acquisition cost: lower CAC, raise price or margin, or reduce churn.
How do I get my CAC?
Divide sales and marketing spend for a period by the number of new customers in the same period. The LTV:CAC calculator on this site does it from spend and new customers.
Annual plans paid upfront?
Then cash payback can be immediate even if the margin-based payback is long. This calculator measures payback in gross profit, not in cash timing.