CAC payback time

How long it takes to break even from Customer Acquisition Costs

Customer Acquisition Costs (CAC) payback time tells how long it takes to break even from the CAC. To increase revenue growth, aim for a CAC payback time of less than 12 months.

Note that Average Revenue Per Account (ARPA) calculation distributes customer payments into monthly recurring revenue. For example, when a customer paid for a subscription of six months in advance, that revenue is divided by six and displayed for a period of six months.



CAC payback time = Customer Acquisition Cost per new customer / (ARPA of all accounts x Gross Margin %)