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How to calculate the CAC payback period in Excel and Google Sheets
Topic:SaaS metricsExcel & Google Sheets
=B1/(B2*(B3/100))Try it with your data
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Step by step
- 1In cell A1 enter 'CAC ($)' and in B1 enter your CAC value (e.g. 1200).
- 2In cell A2 enter 'ARPU per month ($)' and in B2 enter monthly revenue per customer (e.g. 150).
- 3In cell A3 enter 'Gross Margin (%)' and in B3 enter your gross margin percentage (e.g. 75).
- 4In cell A4 enter 'Payback Period (months)' and in B4 enter the formula =B1/(B2*(B3/100)).
- 5The result is the number of months until gross profit from that customer equals CAC. Compare against your 12-month target.
Tips
- Use gross profit per customer, not revenue per customer. Using revenue overstates payback health because it ignores cost of goods sold.
- If you sell multiple plans, calculate payback period per plan tier — enterprise and SMB customers often have dramatically different payback profiles.
- A payback period over 18 months signals that you need to either reduce CAC, increase ARPU, or improve gross margin before scaling spend.
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Frequently asked
What is a good CAC payback period?
Best-in-class SaaS businesses recover CAC in under 12 months. 12–18 months is acceptable for enterprise sales. Over 24 months is a red flag requiring attention.
How does expansion revenue affect payback period?
If customers expand (upgrade plans or add seats), the effective payback is shorter because monthly gross profit increases over time. The formula above uses entry-level ARPU; build a month-by-month model to capture expansion.
Should I use blended or channel-specific CAC in this formula?
Use channel-specific CAC to understand payback by acquisition source. Blended CAC is useful for the company-level metric but masks channel inefficiency.
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