Sales and marketing cost per new customer.
The average a new customer pays each month.
Revenue minus the cost of serving the customer, as a share of revenue.
CAC payback period
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Enter CAC, monthly revenue per customer and gross margin.
- Gross profit per customer per month
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The CAC payback period formula
CAC payback period (months) = CAC ÷ (monthly revenue per customer × gross margin)
Example: A customer costs $600 to win and pays $100 a month at a 75% gross margin, so they bring $75 of gross profit a month: $600 ÷ $75 = 8 months to pay back.
What is the CAC payback period?
The CAC payback period measures how long your money is tied up in each new customer. Until it is paid back, growth costs cash; after that, the customer funds the next one.
It matters most for subscription businesses, where revenue arrives month by month. Shorter payback means growth can fund itself sooner. If customers often leave before the payback point, they never earn back what they cost.
What is a good CAC payback period?
Payback periods from the largest recent study of B2B software companies. Lower-priced products usually pay back faster.
| Where | Typical | Source |
|---|---|---|
| B2B SaaS, median 198 companies reporting, full-year 2025; 18 months in 2024 | 16 months | Benchmarkit and Aleph, 2026 SaaS & AI Performance Benchmarks |
| B2B SaaS, top quarter Full-year 2025 | 6 months or less | Benchmarkit and Aleph, 2026 SaaS & AI Performance Benchmarks |
| B2B SaaS, bottom quarter Full-year 2025 | 24 months or more | Benchmarkit and Aleph, 2026 SaaS & AI Performance Benchmarks |
How to shorten CAC payback
- Lower CAC with better-converting channels and pages.
- Offer annual plans paid up front, which bring the money in at the start.
- Raise the starting price or move customers to a bigger plan sooner.
- Improve gross margin by cutting the cost of serving each customer.
What the CAC payback period doesn't tell you
- The simple formula assumes revenue per customer stays the same. Customers who upgrade pay back faster, and customers who cancel early never do.
- Use the gross margin of the customers you are adding, not the company average, if they differ.
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Frequently asked questions
How do you calculate CAC payback period?
Divide CAC by the gross profit a customer brings each month: monthly revenue × gross margin. $600 ÷ ($100 × 75%) = 8 months.
What is a good CAC payback period?
Many subscription businesses aim for 12 months or less. In full-year 2025 the median B2B SaaS company took 16 months and the top quarter 6 months or less, according to Benchmarkit and Aleph. Low-priced self-serve products usually pay back faster than large contracts.
Should CAC payback use revenue or gross margin?
Gross margin. Revenue includes the cost of serving the customer, so payback on revenue looks shorter than it is.
How does annual billing change CAC payback?
Annual plans paid up front bring a year of revenue on day one, so the cash comes back sooner, even though the payback period on monthly gross profit is the same.
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