What is CAC Payback Period?
Definition
CAC Payback Period is the number of months it takes to recover your customer acquisition cost from the gross profit that customer generates.
Formula
CAC Payback = CAC / (Monthly ARPA × Gross Margin %)
Example:
CAC: $2,400 | ARPA: $200/mo | Margin: 80%
Payback = $2,400 / ($200 × 0.8) = 15 months
Benchmarks
Under 12 months - Excellent
12-18 months - Acceptable
Over 24 months - Unsustainable