CAC Payback Calculator
CAC Payback equals fully-loaded CAC divided by monthly gross profit per customer. D2C target: under 6 months. SaaS SMB: under 18 months. Faster payback = faster reinvestment = exponential growth math; slow payback starves growth.
- CAC Payback = CAC ÷ (AOV × gross margin × monthly purchase frequency).
- D2C target: under 6 months. SaaS SMB: under 18.
- Below 12 months, you can scale spend aggressively.
Annual frequency ÷ 12
Payback (months) = Fully-loaded CAC ÷ (AOV × Gross Margin × Monthly Purchase Frequency)- Use fully-loaded CAC, not media-only.
- Use gross margin (COGS-only), not contribution margin.
- Divide annual frequency by 12 to get monthly.
- Below 6 months: scale aggressively. 6-12: scale carefully. 12+: rethink unit economics.
Frequently asked questions
Why does payback period matter more than CAC?
Payback directly answers 'how fast does my spend recycle?' Faster payback = faster reinvestment = exponential growth. CAC alone tells you nothing without LTV + payback context.
What's a healthy SaaS payback?
Under 12 months for SMB SaaS; under 18 for mid-market; under 24 for Enterprise. Above 24 months, growth requires significant capital reserves.
How does COD return cost affect payback?
Indian D2C with 18% COD RTO sees effective payback 7-12% slower than reported. Adjust by multiplying payback by (1 / (1 - COD% × RTO%)).
Is contribution margin the same as gross margin?
No. Contribution margin includes variable costs beyond COGS — fulfillment, payment fees, refund cost. For honest payback, use gross margin (COGS-only). Contribution margin overstates payback speed.
Want this applied to your business?
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