CAC Payback Period

CAC payback period divides customer acquisition cost by the monthly gross profit that customer generates. A payback period of 14 months means it takes just over a year of that customer's gross profit to recover what it cost to acquire them.

It's often cited alongside — but should be interpreted independently from — LTV:CAC ratio: a company can have an attractive LTV:CAC ratio while still facing a cash-flow problem if payback takes too long relative to how much capital it has to fund the gap.