CAC payback time

How long it takes to break even from Customer Acquisition Costs

Your Customer Acquisition Costs (CAC) payback time tells you how long it takes for you to break even from your 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.

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Formula

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


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