CAC & Payback Period Calculator

Find out what a new customer costs and how many months they take to pay it back.

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Sales and marketing spend for a period

Ads, content, tools, and the salaries of people who sell or market.

New customers won in the same period

Monthly revenue per new customer

Gross margin

Monthly churn (optional)

With churn, the calculator also shows the payback for an average customer, since some leave before they have paid back their CAC.

Currency

CAC payback period

Customer acquisition cost:

Enter the spend, a number of new customers above 0, monthly revenue per customer and gross margin.

gross profit per customer a month

payback with churn

At this churn an average customer leaves before paying back their CAC: lifetime gross profit is .

Formula

CAC = sales and marketing spend ÷ new customers. Payback = CAC ÷ (monthly revenue × gross margin).

Gross profit per customer against CAC

Customer who stays Average customer, with churn CAC

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<p><a href="https://askaiforit.com/free-tools/saas-calculators/cac-payback">CAC &amp; Payback Period Calculator</a> by Ask AI For It</p>

The formulas

CAC (customer acquisition cost) = sales and marketing spend in a period ÷ new customers won in that period.

CAC payback (months) = CAC ÷ (monthly revenue per customer × gross margin).

The payback period is the number of months of gross profit a new customer needs to cover what it cost to win them.

Worked example

Last quarter you spent $12,000 on sales and marketing, including the part of salaries spent on it, and won 40 new customers. They pay $50 a month on average and your gross margin is 80%.

CAC: $12,000 ÷ 40 = $300.
Gross profit per customer per month: $50 × 80% = $40.
Payback: $300 ÷ $40 = 7.5 months.

Add a monthly churn rate and the calculator also shows the payback for an average customer, since some customers leave before they have paid back. At 3% monthly churn the expected payback stretches to about 8.4 months. If churn is so high that lifetime gross profit is below CAC, the average customer never pays back.

How to read it

A short payback means the money you spend on growth comes back quickly and can be spent again. A long one means growth ties up cash for months, which matters most when you fund growth from revenue rather than from investment. A payback under 12 months is a commonly quoted rule of thumb for products sold to small businesses; companies that sell large annual contracts often accept longer periods. Treat these as reference points, not targets.

The chart compares the gross profit from one customer with CAC. The solid line is a customer who stays; the dashed line is the average customer once churn is taken into account.

Common mistakes

Leaving out salaries. Ads are only part of acquisition cost. Include the people who sell and market, and the tools they use.
Blending organic and paid customers. Customers who find you through search or word of mouth cost little, so a blended CAC can hide an expensive paid channel. Calculate CAC per channel when you can.
Ignoring the delay. Spend this month often brings customers next month or later. Compare spend and new customers over a quarter rather than a single month.
Using revenue instead of gross margin. It makes payback look shorter than the cash really takes to come back.

Next, compare acquisition cost with lifetime value in the LTV:CAC ratio calculator.

What should be included in CAC?

All sales and marketing costs for the period: ad spend, content and events, sales and marketing salaries and commissions, and the software those teams use. Keep product and support costs out.

What is a good CAC payback period?

It depends on your customers and how you fund growth. Under 12 months is a rule of thumb often used for products sold to small and mid-sized businesses; longer periods are common with annual enterprise contracts.

Why does churn make payback longer?

Because some customers leave before they have paid back their cost, the remaining ones have to cover the gap. The churn-adjusted payback shows when the average customer breaks even.

How do annual prepaid plans change payback?

They do not change the CAC payback in gross profit terms, but they bring the cash in up front, so the money comes back to your bank account much faster.

Should I calculate CAC per channel?

Yes, if you can attribute customers. Blended CAC is useful for the company as a whole, while per-channel CAC tells you where to spend the next dollar.