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MarginMeter

CAC payback period

Payback period definition for SaaS and AI founders: what it means, how to calculate it, and common pitfalls when reading it in dashboards.

The payback period is how many months of gross profit it takes to earn back what you spent acquiring a customer.

Formula

Payback months = CAC ÷ (ARPA × Gross margin %)

In practice

Using revenue instead of gross profit makes payback look shorter than it is.

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