Formulas
The payback formula uses gross-margin contribution per month, not revenue. Two SaaS products with the same ARPU but different margins recover acquisition cost at very different speeds.
Worked example
Last quarter you spent $40,000 on marketing and $20,000 on sales, and acquired 120 new customers paying $100/month at 80% gross margin.
- Total spend = $60,000
- CAC = $60,000 ÷ 120 = $500
- Gross profit per customer per month = $100 × 80% = $80
- Payback period = $500 ÷ $80 = 6.3 months
FAQ
Should I include salaries in CAC?
Yes — fully-loaded CAC includes the salaries and overhead of the marketing and sales teams, not just media spend. A "blended CAC" that ignores headcount understates the true cost.
Paid CAC vs blended CAC — which should I track?
Track both. Paid CAC (paid channels only) tells you whether ads are profitable. Blended CAC (all spend ÷ all new customers) is what investors look at and reflects the true cost when organic and paid mix together.
What's a good LTV:CAC ratio?
3:1 is the most cited benchmark for SaaS. Below ~1.5:1 you're underwater per customer; above ~5:1 you may be under-investing in growth. Use the LTV calculator to compute the ratio.