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CAC payback period calculator

CAC payback is the number of months a new customer takes to repay what it cost to win them: CAC ÷ (monthly revenue per customer × gross margin). Enter those figures to get the payback period, and add churn to see whether the average customer stays long enough to pay it back.

Only changes how amounts are shown.

For annual plans, divide the yearly price by 12.

%

Revenue minus the cost of serving customers, as a share of revenue.

%

Optional. Leave empty to ignore churn.

CAC payback period

7.5 months

8.4 months once 3% monthly churn is counted

Gross profit per customer a month
₹1,600ARPA × gross margin: ₹2,000 × 80%.
Payback ignoring churn
7.5 months₹12,000 ÷ ₹1,600: repaid in month 8.
Payback with churn
8.4 months (month 9)When a cohort's gross profit per customer won first reaches CAC.
Customers still with you in month 9
78.4%(1 − 3%)^8 of the customers won.
Average customer lifetime
33.3 months (2.8 years)1 ÷ monthly churn. CAC is paid back only if this is longer than the payback ignoring churn.
Most gross profit per customer won
₹53,333Gross profit a month ÷ churn: the cohort's total if you wait for ever.
Month by month until CAC is paid back (month 9), per customer won
MonthCustomers still with youGross profit this monthCumulative gross profitLeft to pay back
1100%₹1,600₹1,600₹10,400
297%₹1,552₹3,152₹8,848
394.1%₹1,505₹4,657₹7,343
491.3%₹1,460₹6,118₹5,882
588.5%₹1,416₹7,534₹4,466
685.9%₹1,374₹8,908₹3,092
783.3%₹1,333₹10,241₹1,759
880.8%₹1,293₹11,534₹466
978.4%₹1,254₹12,788₹0
  • Assumes revenue per customer, gross margin and churn stay the same every month, and counts gross profit, not revenue, towards paying back CAC.

How is the CAC payback period calculated?

CAC payback is the number of months of gross profit it takes to earn back what you spent to win a customer. Divide customer acquisition cost (CAC) by the monthly gross profit per customer, which is average monthly revenue per customer (ARPA) times gross margin. A ₹12,000 CAC and ₹2,000 a month at an 80% margin is ₹12,000 ÷ ₹1,600 = 7.5 months, so the customer has paid for themselves during month 8.

CAC is your sales and marketing spend in a period divided by the new customers won in it. ₹6,00,000 spent to win 50 customers is a ₹12,000 CAC. Use the same period for both, and count everything spent on winning customers, not only ads.

The simple payback assumes every customer stays. With churn, the calculator follows a cohort: in month t, only (1 − churn)^(t − 1) of the customers won are still paying, so each month earns a little less. Payback is the month the running total of gross profit per customer won first reaches CAC; at 3% monthly churn the 7.5 months above becomes 8.4 months.

A cohort's gross profit can never add up to more than gross profit a month ÷ churn. If CAC is at or above that, it is never paid back, however long you wait. The same condition, put another way: the average customer lifetime, 1 ÷ churn, must be longer than the payback ignoring churn.

CAC = sales and marketing spend ÷ new customers
gross profit a month = ARPA × gross margin
payback ignoring churn = CAC ÷ gross profit a month
cumulative gross profit after n months = Σ (t = 1 … n) gross profit × (1 − churn)^(t − 1)
never paid back if CAC ≥ gross profit a month ÷ churn

How to calculate CAC payback

  1. 1
    Enter or work out CACType your CAC, or choose to work it out and enter a period's sales and marketing spend and the new customers won in it.
  2. 2
    Enter revenue and marginType the average monthly revenue per paying customer and your gross margin.
  3. 3
    Add churnType your monthly customer churn to see the payback when some customers leave before paying CAC back, or leave it empty to ignore churn.
  4. 4
    Read the paybackThe result shows the payback ignoring churn, the payback with churn or whether it never happens, and a month-by-month table of gross profit against CAC.

Frequently asked questions

Should CAC payback use revenue or gross margin?
Gross margin. Revenue still has to pay for hosting, support and payment fees, so only the gross profit is left to repay acquisition. Payback on revenue looks shorter: at an 80% margin, 7.5 months on gross profit is 6 months on revenue.
What costs go into customer acquisition cost?
Everything you spend to win new customers in a period: ad spend, sales and marketing salaries and commissions, agencies, events and the tools those teams use. Divide the total by the new customers won in the same period. Leaving out salaries makes CAC, and so payback, look smaller.
Can CAC never be paid back?
Yes, when churn is high enough. A cohort's gross profit per customer won tops out at monthly gross profit ÷ churn. With ₹1,600 a month at 3% churn that ceiling is ₹53,333, so a CAC of ₹60,000 is never paid back, even though the payback ignoring churn is 37.5 months.
How does churn lengthen the payback period?
Each month fewer of the customers you won are still paying, so a cohort earns less than the full gross profit. At 3% monthly churn a 7.5-month payback stretches to 8.4 months, and a 24-month payback to 41.8 months; the longer the payback, the more churn adds to it.
How do annual plans paid upfront affect CAC payback?
A customer who pays a year upfront brings in the cash at once, but the calculator works in monthly gross profit, so enter the yearly price ÷ 12 as ARPA. The payback in months is the same; the upfront cash shortens the time you are out of pocket, which a cash-flow view would show separately.

Built and maintained by CountryDevs. Updated October 2026. Runs in your browser; what you type is not sent to us.

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