CAC payback calculator
Work out what it costs to win a customer and how many months of gross margin it takes to earn that back. Use fully loaded sales and marketing cost and gross margin, not revenue, so the answer matches your cash.
- CAC per new customer
- Monthly gross margin per new customer
- Lifetime value (directional)
- LTV to CAC
What would move it
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The formula
CAC payback = CAC ÷ (new MRR per customer × gross margin)
Use the same months for both parts of CAC. The last three months smooth out lumpy quarters. Payback uses gross margin because that's the cash each customer actually contributes after the cost of serving them.
The traps that flatter it
- Ad spend only. Leaving out salaries, commissions and contractors can understate CAC several times over.
- Revenue instead of margin. Dividing by MRR rather than gross margin makes payback look shorter than it is.
- Setup fees in MRR. One-off implementation or onboarding fees aren't recurring, so leave them out of new MRR.
- Mismatched periods. Spend from one quarter divided by customers from another tells you very little.
Reading the result
As a Rev-IQ rule of thumb for smaller B2B deals:
- Under about 12 months: healthy.
- 12 to 18 months: worth watching, especially if churn is rising.
- Well past 18 months: needs attention. Growth is consuming cash faster than customers repay it.
Enterprise deals with long contracts and low churn can carry longer payback. Payback matters most when churn is high, because some customers leave before they've paid back what they cost.
CAC payback is one of six numbers covered in The Six SaaS Numbers That Actually Matter.
CAC payback, answered
What is CAC payback?
CAC payback is the number of months it takes for a new customer's gross margin to repay what you spent to win them. It's calculated as CAC divided by the average new customer's monthly recurring revenue multiplied by your gross margin.
Should CAC payback use revenue or gross margin?
Gross margin. Revenue makes payback look shorter than it really is, because it ignores the cost of hosting, support and delivering the service. Using margin shows when the customer has actually paid back the cash spent to win them.
What should be included in CAC?
All sales and marketing cost for the period: salaries, commissions, contractors and agencies, as well as ad spend, events and tools. Divide it by the number of new paying customers won in the same period. Ad spend alone can understate CAC several times over.
What is a good CAC payback period?
As a Rev-IQ rule of thumb for smaller B2B deals, under about 12 months is healthy, 12 to 18 months is worth watching, and well past 18 months needs attention. Larger enterprise deals often run longer. Payback matters more when churn is high, because customers may leave before they've paid back.
Which period should I use?
Use the same months for spend and new customers, ideally the last three months. A single month is often lumpy, and spend usually comes before the deals it produces.
How is CAC payback different from LTV to CAC?
Payback tells you how quickly the money comes back. LTV to CAC estimates how much margin a customer generates over their whole life compared with what they cost to win. LTV relies on a churn assumption, so treat it as directional rather than a number to manage monthly.
Rev-IQ Six SaaS Numbers, a free AI skill
Works out MRR, ARR, gross and net churn, CAC, CAC payback and runway from your P&L or MRR export in Claude, ChatGPT or Perplexity, and tells you which number to worry about first.