CAC Payback Period CAC Payback (months-to-recover)
How many months of a customer's revenue it takes to earn back the cost of acquiring them.
The fork, why two teams get different numbers
The sharp fork is gross-margin-adjusted vs unadjusted. The rigorous version
divides CAC by the customer's monthly gross profit (revenue × gross margin %);
the loose version divides by monthly revenue, ignores the cost of service, and
understates payback. A second fork: new-logo CAC (only new-customer acquisition
cost against new-customer revenue) vs blended CAC (all sales-and-marketing over
all new revenue including expansion), which flatters payback by crediting cheap
upsell against total spend. A third: MRR vs ARR framing.
The trap
An unadjusted 12-month payback can be a true 18-plus months once gross margin is applied, the difference between an efficient business and a struggling one.
- The full trap, worked on a real export
- Every formula variant, spelled out
- The reconciliation anchor, what to tie it to and when to refuse
Reference: Non-GAAP unit-economics metric, no authoritative standard · FASB ASC 340-40 (Costs to obtain a contract)