CAC Payback Calculator: when does a customer pay you back?
Five numbers from your books. You get CAC, the months it takes a customer to pay it back, LTV and LTV:CAC, each with a plain verdict. Nothing is sent anywhere.
- You enter
- Spend, new customers, ARPA, gross margin, churn
- You get
- CAC, payback months, LTV and LTV:CAC with a verdict
- Takes
- 2 minutes
- Costs
- Nothing. Email only for the what-ifs
Every field starts on an example. Use one period for both spend and customers: a quarter or a year.
1What winning customers cost
Everything it took: sales and marketing salaries and commission, ads, tools, agencies. Founder hours count too, at what you'd pay someone to do them.
2What a customer brings in
Monthly recurring revenue divided by the number of paying accounts. Annual contracts: divide by 12.
Revenue minus hosting, support and the cost of delivering the product. 80% is a figure you'll often hear quoted for software; use your own.
Customers lost in a month divided by customers at the start of it. Take the average over the last 6 to 12 months.
3How far you'll count
At 0.5% monthly churn the maths says the average customer stays 16 years. I cap it at five years, because nobody should plan cash on year twelve.
Above the 3:1 rule of thumb. Each customer returns more than three times what they cost to win.
Each customer costs €4,500 to win and brings in €400 a month in gross margin.
- CACspend ÷ new customers€4,500
- Gross margin per customerper month€400
- CAC paybackCAC ÷ monthly gross margin11.3 months
- Customer lifetime1 ÷ monthly churn50 months
- LTVmonthly gross margin × lifetime€20,000
Payback in 11.3 months, inside the 12-month rule of thumb.
3:1 and 12 months are rules of thumb, not laws. Both were made popular by David Skok's SaaS Metrics 2.0; annual prepayment or long contracts change what you can live with.
What moves your numbers most
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Gross margin in, rules of thumb out.
CAC is sales and marketing spend divided by the new customers it won, over the same period. Payback is CAC divided by the gross margin one customer brings in per month: the months until they've paid back what they cost. Lifetime is 1 divided by monthly churn, capped at the number you set. LTV is monthly gross margin times lifetime, and LTV:CAC is LTV divided by CAC.
I use gross margin, not revenue, in both payback and LTV. The part of revenue that goes to hosting and support never pays back anything, and a revenue-based LTV makes every company look better than it is.
The verdicts lean on two rules of thumb: LTV at least three times CAC, and CAC back within 12 months. David Skok's SaaS Metrics 2.0 made both popular, and they've been repeated so often they sound like laws. They aren't. A business with annual prepayment can carry a longer payback, and a 6:1 ratio can mean you're not spending enough on growth. Read them as a first look, not a grade.
The mistake I see most is leaving the founder's own time out of the spend. If you did half the selling yourself, put in what it would cost to pay someone to do it. The longer version, with the formulas worked through, is in SaaS sales unit economics.
Questions people ask
What is a good LTV:CAC ratio for B2B SaaS?
The rule of thumb is 3:1 or better, made popular by David Skok's SaaS Metrics 2.0. It comes from investor experience, not from a law of nature. Below 1:1 every customer loses you money over their lifetime. Well above 5:1 can mean you're spending too little on winning customers.
What is a good CAC payback period?
Under 12 months is the common rule of thumb, from the same source. Longer isn't automatically bad: if customers pay a year upfront, the cash is back on day one even when the margin maths says 18 months. What a long payback really tells you is how much cash every new customer ties up.
Why does the calculator cap the customer lifetime?
Because 1 divided by a low churn rate gets silly fast. At 0.5% monthly churn the maths says the average customer stays 16 years, and an LTV built on that justifies spending almost anything to win them. I cap it at five years by default. Change the cap if you have the retention history to back a longer one.
Should I use logo churn or revenue churn?
This calculator uses logo churn, the share of customers lost, because CAC is counted per customer too. If your customers grow a lot after they sign, revenue churn can be much lower or even negative, and the LTV here is on the cautious side. That's the side I'd rather be wrong on.
Is the acquisition cost where you think it is?
A high CAC is usually a targeting problem before it's a spend problem. Send me your website and I'll record a 10-minute video going through it, your positioning and your sales process. Free, in your inbox within 48 hours.