Startup Finance FAQ / Strategic Finance

What does CAC Payback Period mean?

Fast Answer:

Customer Acquisition Cost (CAC) payback period refers to the number of months it takes your startup to earn back its investment in acquiring a new customer. In other words, it’s the average time it takes for the net revenue from a customer to equal the cost spent on acquiring them.

For example, if a SaaS startup spends $1,000 on marketing to acquire a new customer and earns $100 per month from the customer, the payback period would be 10 months.