Free tool CAC payback calculator and formula
CAC payback is how many months of gross profit it takes to earn back what you spent to win a customer. Enter CAC, monthly revenue per customer and gross margin for the simple answer; add churn and expansion to follow a whole cohort month by month.
- Simple and cohort payback
- Month-by-month table
- Runs locally
How long until a customer pays back?
Rates are monthly. Churn is the share of the cohort that leaves each month; expansion is how much revenue per remaining customer grows each month (upgrades, extra seats).
Sales and marketing cost ÷ new paying customers.
Starting monthly recurring revenue of a new customer (ARPA).
Revenue left after hosting, support and payment costs.
Share of customers lost each month. Leave empty for none.
Growth in revenue per remaining customer each month.
Simple payback (months)
15.0
CAC ÷ (revenue per customer × gross margin). Ignores churn and expansion.
Cohort payback (months)
17.7
When cumulative gross profit per customer acquired reaches CAC, counting churned customers as zero.
Cumulative gross profit per customer acquired
One row per month for an average customer from the cohort. "Customers remaining" is the share still subscribed at the start of the month; the green tag marks the month CAC is recovered.
| Month | Customers remaining | Gross profit this month | Cumulative gross profit | CAC recovered |
|---|---|---|---|---|
| 1 | 100.0% | $40.00 | $40.00 | 6.7% |
| 2 | 97.0% | $39.19 | $79.19 | 13.2% |
| 3 | 94.1% | $38.39 | $117.58 | 19.6% |
| 4 | 91.3% | $37.61 | $155.19 | 25.9% |
| 5 | 88.5% | $36.85 | $192.04 | 32.0% |
| 6 | 85.9% | $36.10 | $228.14 | 38.0% |
| 7 | 83.3% | $35.37 | $263.51 | 43.9% |
| 8 | 80.8% | $34.65 | $298.16 | 49.7% |
| 9 | 78.4% | $33.95 | $332.11 | 55.4% |
| 10 | 76.0% | $33.26 | $365.37 | 60.9% |
| 11 | 73.7% | $32.58 | $397.95 | 66.3% |
| 12 | 71.5% | $31.92 | $429.87 | 71.6% |
| 13 | 69.4% | $31.27 | $461.15 | 76.9% |
| 14 | 67.3% | $30.64 | $491.79 | 82.0% |
| 15 | 65.3% | $30.02 | $521.80 | 87.0% |
| 16 | 63.3% | $29.41 | $551.21 | 91.9% |
| 17 | 61.4% | $28.81 | $580.02 | 96.7% |
| 18 | 59.6% | $28.23 | $608.25 | 101.4% |
| 19 | 57.8% | $27.65 | $635.90 | 106.0% |
| 20 | 56.1% | $27.09 | $662.99 | 110.5% |
| 21 | 54.4% | $26.54 | $689.53 | 114.9% |
Share these inputs: the values go after the # in the link, so they never reach a server.
https://tapcub.com/tools/cac-payback-calculator
Version v1.0Updated Update history
Two payback figures, and why they differ
The simple formula assumes every customer stays and keeps paying the same amount. The cohort version lets some leave and some grow, which is closer to what your cash actually does.
Simple payback
$600 ÷ ($50 × 80%) = 15 months. Quick to compute and the figure most often reported, but it quietly assumes zero churn.
Cohort payback
With 3% monthly churn and 1% expansion, the same customer takes 17.7 months. Churned customers stop paying, so the average customer acquired earns less each month.
Recovered after 12 and 24 months
How much of CAC is back after one and two years. About 72% after a year means more than a quarter of each new customer's CAC is still unpaid twelve months in.
When it never pays back
If cumulative gross profit levels off below CAC, the table never turns green. That is the same as an LTV below CAC; see the LTV:CAC ratio calculator.
Expansion is applied to the customers who remain; churn to everyone. The table stops at 60 months, or 36 if CAC is never recovered.
Three steps
Start simple, then add what you know.
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1
Enter CAC, revenue and margin
CAC from the CAC calculator; revenue per customer is what a new customer pays per month; use gross margin, not revenue.
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2
Add churn and expansion
Monthly logo churn from the churn rate calculator; expansion from upgrades and seats added by existing customers.
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3
Read the table
Find the month the tag turns green, and check the cash you need to carry new customers until then.
CAC payback = CAC ÷ (revenue per customer × gross margin)
The simple formula divides acquisition cost by the gross profit a customer brings in each month. The cohort version adds up expected gross profit month by month until it reaches CAC.
- Cohort: month k gross profit = revenue × margin × [(1 + expansion) × (1 − churn)]^(k − 1)
- Company level (a16z): (sales + marketing) ÷ (net new ARR × gross margin), × 12 for months
- Use the same period for CAC and revenue, and gross margin rather than revenue
Simple
months = CAC ÷ (ARPA × margin)
$600 ÷ ($50 × 80%) → 15.0 months
Month k (cohort)
GP_k = ARPA × margin × q^(k−1), q = (1 + e)(1 − c)
$40 × (1.01 × 0.97)^(k−1)
Cohort payback
first month where ΣGP ≥ CAC
17.7 months at 3% churn, 1% expansion
The first 20 months of one cohort
CAC $600, $50 a month, 80% gross margin, 3% monthly churn, 1% monthly expansion. Selected rows from the table above.
| Month | Customers remaining | Gross profit this month | Cumulative | CAC recovered |
|---|---|---|---|---|
| 1 | 100.0% | $40.00 | $40.00 | 6.7% |
| 6 | 85.9% | $36.10 | $228.14 | 38.0% |
| 12 | 71.5% | $31.92 | $429.87 | 71.6% |
| 17 | 61.4% | $28.81 | $580.02 | 96.7% |
| 18 | 59.6% | $28.23 | $608.25 | 101.4% |
The simple formula says 15 months. Because 3% of customers leave each month, the average customer acquired only crosses $600 during month 18 (17.7 months by interpolation). Sample figures.
Why payback is often shorter on paper
Each of these makes the number look better than the cash.
Revenue instead of gross profit
At 80% margin, payback on revenue is 20% shorter than on gross profit. Hosting, support and payment fees are paid before CAC is.
Ignoring churn
The simple formula assumes nobody leaves. At 3% monthly churn the real payback above is almost three months longer.
Ad spend only as CAC
Leaving out sales salaries and tools shortens payback without changing the cash you actually spend.
Annual prepayment counted as speed
An annual plan paid upfront improves cash flow but not gross profit per month. Report payback on normalised monthly revenue, and cash separately.
Revenue per account and churn, from your billing events
TapCub does not compute payback for you, but the B2B SaaS template gives you the inputs: subscriptions, upgrades and cancellations from your billing system with MRR normalised to monthly, and retention counted per account.
New, expansion and churned MRR
subscription_started, subscription_upgraded and subscription_cancelled carry MRR figures.
Learn moreAccount-level retention
Weekly retention after signup, counted per account.
Learn moreChannel ROI
Import spend per channel next to the customers it brought.
Learn moreCAC payback questions
Still have a question?
Chat with the team behind TapCub — we usually reply within a few hours on business days.
How do I calculate CAC payback?
Divide CAC by the monthly gross profit of a new customer: CAC ÷ (monthly revenue per customer × gross margin). $600 ÷ ($50 × 80%) = 15 months.
What is a good CAC payback period?
It depends on who you sell to. a16z's 11 key GTM metrics (2020) puts the average startup at 12–18 months, enterprise sales at 18–24 and SMB at 6–12. David Skok's SaaS Metrics 2.0 suggested under 12 months, and notes that the guideline dates from 2011 and that enterprise land-and-expand businesses can work at around 20.
Should payback use revenue or gross margin?
Gross margin. Acquisition is paid back out of what is left after the cost of serving the customer. Payback on revenue equals payback on gross profit × margin, so at 80% margin it looks 20% shorter than it is.
How do churn and expansion change payback?
Churn lengthens it, because customers who leave stop contributing; expansion shortens it. When (1 + expansion) × (1 − churn) equals 1, they cancel out and the cohort pays back on the simple schedule.
How do I calculate CAC payback for the whole company?
Use sales and marketing spend for a period ÷ (net new ARR in that period × gross margin), then multiply by 12 for months. This is the version in the a16z article above.
How is CAC payback related to LTV:CAC?
With constant churn, LTV:CAC = expected lifetime ÷ payback months. A 15-month payback with a 33-month lifetime is roughly 2.2 : 1.
Update history
New features, fixes and data refreshes for this tool, newest first.
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· v1.0
LaunchedFirst release.
Missing something or found an error? Tell us — requests that come up often go into the next update. All tool updates
Follow every cohort in one place
The B2B SaaS template tracks accounts from signup to subscription, with MRR and cancellations from billing.