About this calculator
Winning a customer costs money before it earns any. The CAC payback period is how many months it takes a customer to earn back their customer acquisition cost (CAC). It's the break-even point for your sales and marketing spending.
Add your monthly churn and the calculator also shows how long customers stay, what they're worth over that lifetime, and whether they leave before they've paid you back.
Worked examples
Real numbers, worked out by the same calculator. Press “Use these numbers” to try one above.
£600 CAC, £50 a month, 80% margin, 5% churn
- Payback period
- 15 months
- Profit per customer per month
- £40.00
- Average customer lifetime
- 20 months
- Lifetime profit per customer
- £800.00
- Lifetime profit to acquisition cost
- 1.33×
Each customer earns you £40.00 a month after costs, so £600.00 of acquisition cost is paid back in 15 months. Customers stay 20 months on average, so you earn back 1.33× what you spent.
The same, with 10% churn
- Payback period
- 15 months
- Profit per customer per month
- £40.00
- Average customer lifetime
- 10 months
- Lifetime profit per customer
- £400.00
- Lifetime profit to acquisition cost
- 0.67×
Each customer earns you £40.00 a month after costs, so £600.00 of acquisition cost is paid back in 15 months. But customers stay only 10 months on average, so they leave before paying back what you spent.
£200 CAC, £30 a month, 90% margin
- Payback period
- 7.4 months
- Profit per customer per month
- £27.00
Each customer earns you £27.00 a month after costs, so £200.00 of acquisition cost is paid back in 7.4 months.
The formulas
Monthly profit per customer = revenue × gross margin. £50 × 80% = £40.
CAC payback = CAC ÷ monthly profit per customer. £600 ÷ £40 = 15 months.
Customer lifetime = 1 ÷ monthly churn. At 5% a month that's 20 months.
Lifetime profit = monthly profit ÷ monthly churn. £40 ÷ 0.05 = £800, which is 1.33 times the £600 spent winning the customer.
Do customers stay long enough?
The key comparison is payback against lifetime. If customers stay longer than it takes to pay you back, every customer is profitable. If they leave sooner, you lose money on each one, however good the sales look. Try the second example above: at 10% churn, customers stay ten months but take fifteen to pay back.
Many investors quote a ratio of lifetime profit to acquisition cost of around 3 to 1 as a healthy target. Treat that as a rule of thumb: it varies with the type of business.
Getting your CAC right
Include everything spent on winning customers in a period (advertising, sales wages, tools and commissions), and divide by the number of new customers in that same period. Leaving out staff time is the most common way CAC gets understated.
Frequently asked questions
What is CAC payback?
The number of months it takes a customer to earn back the amount you spent to win them, counting profit rather than revenue.
How do I calculate CAC?
Add up all sales and marketing costs in a period and divide by the number of new customers won in that period.
Why use gross margin instead of revenue?
Serving a customer costs money too. Payback measured on revenue looks faster than it really is. Using margin shows how quickly you get your money back.
What is a good payback period?
Shorter is better because your cash is tied up for less time. What's acceptable depends on your business and how much cash you have, but it should be well under how long customers stay.
What if customers leave before payback?
You lose money on each customer. Reduce your CAC, raise your price or margin, or reduce churn.
Formulas tested against hand-worked answers. Last reviewed 29 September 2026. These calculators do arithmetic only; they are not financial, tax or legal advice.