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CAC Payback Period

Also known as payback period, cac payback

How long it takes to earn back the money you spent acquiring a customer. Shorter is better — you recover cash faster.

Example

A ₹6,000 CAC earning ₹1,000 gross profit per month pays back in 6 months.

Formula

Payback (months) = CAC ÷ Monthly Gross Profit per Customer

Related terms

LTV
The total money you expect to earn from one customer over the whole time they stay with you.
CAC
The average amount you spend to win one new paying customer — all your marketing and sales costs divided by how many customers that money brought in.
Gross Margin
The share of each sale left over after the direct cost of making it — before overheads. Higher margins give you more room to grow.

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