CAC Payback Calculator (2026) - Gross-Margin Payback Months

Why CAC / ARPU is the wrong payback clock

Dividing acquisition cost by monthly revenue pretends the whole invoice is cash you keep. Hosting, support, and card fees come out first. Gross-margin-adjusted payback uses only the dollars left after that haircut. On the defaults, naive payback is 8.0 months. After an 80% margin it is 10.0 months. That extra two months is inventory you would have spent if you staffed growth on the 8-month story.

Monthly gross profit = ARPU x (gross margin / 100)
GM-adjusted payback = CAC / monthly gross profit
Simple (no margin) payback = CAC / ARPU
Discounted: sum profit / (1 + r)^t until the sum covers CAC
LTV = monthly gross profit / 0.03
LTV:CAC = LTV / CAC

If ARPU times gross margin is not positive, payback is Unrecoverable. Copy is blocked and an alert explains that CAC cannot be earned back. Gross margin of 0% is the same trap: you never divide by zero, you stop.

Discounted payback and the 12 / 18 month bands

A month of $120 next year is worth less than $120 today if capital costs 0.8% a month (about 10% a year). This page discounts each month's contribution and adds until the present value equals CAC. Defaults land near 10.5 months. Set the discount to 0% and discounted payback matches the 10.0 month figure. If either walk exceeds 120 months, the KPI shows 120+ Months.

Health uses the gross-margin-adjusted (not naive) number: under 12 months green, 12 to 18 yellow, over 18 red. Twelve months exactly is yellow. Eighteen months exactly is yellow. 18.1 is red. Raise CAC or cut margin and watch the pill move before you increase paid spend.

The 3% churn LTV preview

LTV here is not fitted to your book. It assumes 3% monthly logo churn so you can see LTV:CAC next to payback without leaving the page. $120 / 0.03 = $4,000, and $4,000 / $1,200 = 3.33:1. If your churn is 5%, LTV is lower and the ratio is worse. Measure real churn on the Churn Rate Calculator, then finish unit economics on the SaaS LTV Calculator.

CAC must include people, tools, and agencies, not only ad invoices. Founder-led sales with a $200 "CAC" will print a 1.7 month payback that vanishes when you hire an AE. Recalculate with a fully loaded number. Copy exports CAC, ARPU, margin, discount rate, both paybacks, monthly gross profit, LTV, and the ratio as plain text.

Frequently Asked Questions (FAQ)

How do you calculate CAC payback with gross margin?

Monthly gross profit per customer is ARPU times gross margin. Payback months is CAC divided by that profit. Defaults: $1,200 CAC, $150 ARPU, 80% margin gives $120 of monthly gross profit and a 10.0 month payback. Skipping margin (CAC / ARPU) prints 8.0 months and understates the cash you still owe the product.

What is capital-adjusted or discounted CAC payback?

Each month of gross profit is discounted by the monthly capital cost, then summed until the present value covers CAC. At a 0.8% monthly rate on the defaults, payback stretches from 10.0 months to about 10.5 months. If the walk still has not covered CAC by month 120, the display is 120+ Months.

What CAC payback is healthy?

This page treats under 12 months as green, 12 to 18 months as yellow, and over 18 months as red. Many B2B teams aim to recover CAC inside a year of contribution margin. Consumer apps often need it faster because churn is higher.

How is the LTV:CAC preview calculated?

It assumes a 3% monthly churn baseline. LTV is (ARPU times gross margin) divided by 0.03. Defaults: $120 / 0.03 = $4,000 LTV, and $4,000 / $1,200 CAC = 3.33:1. Change churn on the SaaS LTV Calculator if your real rate is not 3%.

CAC Payback Calculator