Definition
What is CAC Payback Period?
Months of gross profit needed to recover the cost of acquiring a customer.
CAC payback measures how long acquisition spend stays underwater. Until payback, each new customer consumes cash; after it, they generate it. Bootstrapped companies usually need payback under 6–12 months because they finance growth from operating cash, while venture-funded companies can tolerate longer. Payback connects CAC to runway: aggressive acquisition with slow payback shortens runway even when LTV:CAC looks healthy.
Formula
CAC Payback (months) = CAC ÷ (Monthly Revenue per Customer × Gross Margin)Example
$250 CAC, $50/month revenue, and 70% gross margin: payback = 250 ÷ 35 = about 7.1 months.