Metrics & Performance
CAC Payback Period
The number of months required to recover the cost of acquiring a customer from the gross profit that customer generates — a core measure of go-to-market efficiency.
CAC Payback Period = CAC / (MRR per Customer × Gross Margin %)
Benchmarks: SMB SaaS targets 12-18 months; mid-market 18-24 months; enterprise 24-36+ months given higher ACV and retention. Companies with payback periods under 12 months have exceptionally efficient go-to-market motions.
Short payback periods mean cash from new customers funds acquiring the next wave — a highly capital-efficient, self-funding growth model.
In Practice
A company spending $2,400 to acquire a customer paying $200/month at 75% gross margin: payback = $2,400 / ($200 × 0.75) = 16 months. If that customer churns at month 14, the company never recovered its CAC.
Why It Matters
VCs increasingly use CAC payback as the primary efficiency metric at Series A and B. Companies with sub-18-month payback can grow faster with less capital. Those with 36+ month payback need to show exceptional retention and LTV to justify the model.