CAC Payback

Jargon
Written By Landon Howell

CAC Payback is a metric that measures the time it takes for a startup to recoup the cost of acquiring a new customer, Customer Acquisition Cost (CAC), through the revenue generated from that customer.

It represents the number of months it takes to recover the cost of acquiring a new customer.

Formula to calculate CAC Payback

($) CAC / ($) Avg MRR x (%) Gross Margin

Startups with a shorter CAC Payback period are considered to be more successful and sustainable.

A shorter payback period means that startups are able to recover the costs of acquiring new customers more quickly and generate a positive return on investment.

Landon Howell
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