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Product metrics and goals

CAC payback period

Also called Payback period, Months to recover CAC

How many months of a customer's gross profit it takes to earn back what it cost to win them.

How it's worked out

Customer acquisition cost ÷ (average monthly revenue per customer × gross margin)

Until a customer pays back their CAC, growth costs cash. A shorter payback lets a company reinvest sooner and grow on its own money.

For SaaS, under 12 months is usually considered good; enterprise products with large contracts often run longer.

In practice

A $500 CAC and $82 of monthly gross profit per account pay back in about six months.

Common mistake

Ignoring churn. If customers tend to leave before the payback period ends, they never pay back at all.

Where it comes from

Popularised alongside LTV to CAC in David Skok's writing on SaaS metrics.

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