CCalclabhub

Marketing

CAC payback period

Divides the acquisition cost by the monthly contribution the customer leaves behind. Use contribution, not gross revenue: with 80 of revenue at 75 per cent margin the contribution is 60, giving 5.33 months rather than the misleading 4 months.

The Formula

Payback months = CAC / (Monthly revenue per customer x Gross margin)

Divides the acquisition cost by the monthly contribution the customer leaves behind. Use contribution, not gross revenue: with 80 of revenue at 75 per cent margin the contribution is 60, giving 5.33 months rather than the misleading 4 months.

SymbolMeaning
Monthly revenue per customerAverage monthly revenue from one customer
Gross marginShare of revenue left after the cost of serving the customer
Payback monthsMonths of contribution needed to repay the CAC

What Each Symbol Means

Monthly revenue per customercurrency per month

Average monthly revenue from one customer

Here 80. Use a cohort average, not the headline plan price.

Gross marginpercent

Share of revenue left after the cost of serving the customer

Here 75 per cent, entered as 75 and divided by 100 inside the calculation.

Payback monthsmonths

Months of contribution needed to repay the CAC

Here 320 / 60 = 5.33 months.

See It Worked With Real Numbers

A formula on its own does not tell you which number goes where. The how to calculate customer acquisition cost page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.

Where This Formula Appears

This equation is the working core of How To Calculate Customer Acquisition Cost, filed under Business. Every number the guide produces comes from substituting into this one line.