CAC Payback Period
How many months of a customer's payments it takes to earn back what you spent acquiring them.
How it's calculated
CAC payback = CAC ÷ (monthly revenue × gross margin)
Why it matters
Shorter payback = less cash tied up = you can grow faster on the same budget.
Related terms
Customer Acquisition Cost (CAC)
What it costs, all-in, to win one new customer — ads, sales salaries, tools, the works.
Lifetime Value (LTV)
The total gross profit you expect from a customer across their whole relationship with you.
Gross Margin
The share of revenue left after the direct cost of delivering your product (cost of goods sold).
Contribution Margin
What each sale contributes to fixed costs and profit after all the variable costs of that sale.