Unit economicsMetric 15 of 35
CAC Payback
Months until a new customer pays back what you spent to land them.
How many months a new customer takes to repay the cost of acquiring them, on a gross-margin basis. Critical for cash-constrained startups — a great LTV:CAC means nothing if payback is 4 years and you have 12 months of runway.
Formula
CAC Payback = CAC ÷ (ARPU × Gross Margin)Worked example
CAC $1,200, ARPU $200, margin 80% → Payback = 1,200 ÷ (200 × 0.80) = 7.5 months.
Benchmark
B2B SaaSExcellent
< 12 months
Healthy
12–18 months
Cash risk
> 24 months
Why it matters
CAC payback is the bridge between unit economics and cash flow. A 36-month payback with 12 months of runway is structural insolvency, regardless of LTV. Investors increasingly index on CAC payback over LTV:CAC because it's harder to game.
Common mistakes
- Calculating payback on revenue not gross profit — overstates by COGS percentage.
- Annualising rather than computing month-by-month, which loses early-period detail.
Tracked in FlowMRR
Not tracked — needs your CAC; FlowMRR supplies the ARPU and gross-margin half of the formula.