How does the cac payback calculator work?
Borrowed from Finance: Payback = CAC / (monthly revenue × gross margin)
Payback uses gross profit, not revenue, because product and delivery costs must be covered before acquisition cost is recovered.
Worked example
A US SaaS firm spends $900 to win a customer who pays $150 a month at a 70% gross margin. Monthly gross profit is $105, so payback is 900 ÷ 105 = 8.6 months.
How should I read my result?
Healthy for most subscription businesses. Consider raising acquisition spend.
Acceptable with strong retention and funding. Watch cash flow.
Cash is tied up for a long time. Cut acquisition cost or raise price.
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Questions about cac payback calculator
What is a good CAC payback?
Many subscription companies aim for under 12 months, though funding and retention change what is acceptable.
Should CAC include salaries?
Yes. A fully loaded CAC includes sales and marketing salaries and tools, not only ad spend.
How is this different from LTV to CAC?
Payback measures time to recover cost. LTV to CAC measures lifetime value against cost.