Payback Period (CAC Payback)
Definition
How long it takes to earn back what you spent to acquire a customer, measured in contribution margin.
Want a deeper explanation?
Formula
CAC Payback (months) = CAC ÷ Monthly Contribution Margin per CustomerPayback tells you how long your cash is tied up in each new customer. A shorter payback means faster, safer growth.
It should be based on contribution margin, not revenue. Watch for: payback calculated on revenue, which can make a 12-month payback look like 3.
Example
A $45 CAC and $15 of contribution margin per customer per month means a 3-month payback.