CAC payback time

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.

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Formula

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