BizJourney
Home › Formulas › CAC payback (months)

How to calculate CAC payback (months)

The CAC payback (months) formula, with plain worked examples you can check yourself.

CAC payback (months) = CAC ÷ (ARPU × GM)

Worked examples

CAC = 360 · ARPU = 100 · GM = 60%CAC payback (months) = 6
CAC = 360 · ARPU = 50 · GM = 60%CAC payback (months) = 12
CAC = 600 · ARPU = 100 · GM = 60%CAC payback (months) = 10

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Funding & Growth.

Related terms

Venture capitalBurn rateIPOPivotSeed fundingRunway

Practice CAC payback (months) with real numbers

Quizzes, a CEO simulator, a real estate tycoon game and startup tools. Free to start, in 7 languages.

Play BizJourney free →