CAC payback

The CAC payback measures the time needed to recover the cost of acquiring a customer, or CAC – Customer Acquisition Cost, through the margin that customer generates. It is calculated by dividing the CAC by the monthly gross margin brought in by a customer, and is expressed in months. A CAC payback of twelve months means it takes a year of contribution to amortise the commercial effort spent to win the customer.

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This indicator is essential to analysing subscription and SaaS (Software as a Service) models, where the company incurs large commercial spending upfront, recovered later through recurring payments. A short payback period reflects an efficient acquisition engine that is light on cash; a long period stretches the Runway (Startup) and calls for more abundant financing to sustain growth.

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By way of example, a customer costs 1,200 CHF to acquire and brings in 200 CHF of gross margin per month: the CAC payback is six months. Beyond that period, each month of contribution becomes profit, which makes the model light on cash.

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The CAC payback is read alongside the ratio of LTV – Lifetime Value to CAC, which measures a customer's total profitability over their lifetime. Together, these indicators tell whether commercial growth creates value or consumes capital without sufficient return, a decisive distinction in valuation.