CAC Payback Period is the amount of time it takes for a company to earn back the money spent to acquire a customer, calculated using the Customer Acquisition Cost (CAC) and the Gross Margin.
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How is CAC Payback calculated?
Payback Months = CAC / (ARPA × Gross Margin %). For SaaS, a payback period of under 12 months is considered excellent, while over 24 months is usually unsustainable for early-stage companies.
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