Glossary
CAC Payback Period
The number of months it takes to recover customer acquisition cost through gross profit. Under 12 months is excellent; 12-18 is healthy; over 24 is concerning.
By Amit Tyagi, Fitoor Capital · AletheiaAI Glossary
Definition
CAC Payback Period measures how many months it takes for the gross profit from a customer to equal their acquisition cost.
Formula: CAC Payback = CAC / (Monthly ARPU × Gross Margin). Result in months.
Benchmarks: under 12 months is excellent for SaaS, 12-18 is healthy, 18-24 is acceptable in heavy growth mode, over 24 months typically signals inefficient unit economics.
India Context
Indian B2B SaaS targets CAC payback under 15 months at scale. Indian consumer/D2C tolerates longer payback (24-36 months) because retention curves are flatter. Series A investors discount companies with CAC payback above 24 months as having questionable scalability.
Example
SaaS startup: CAC ₹1.5L, ARPU ₹25,000/month, 75% gross margin. CAC Payback = ₹1.5L / (₹25,000 × 0.75) = ₹1.5L / ₹18,750 = 8 months — excellent.
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