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How is CAC payback calculated?

Asked 2 years ago

I need to figure out how long it takes me to make back the money that it costs for customer acquisition. How do I calculateit?

Ltv cac ratio Calculation example Business metrics ratio Cac payback

+3

Dangelo Hickman

Wednesday, April 20, 2022

CAC's payback period refers to the time it takes for a business to recover or earn back its customer acquisition cost. To calculate your CAC payback, you need to consider three key metrics: customer acquisition cost (CAC), average revenue per account (ARPA), and gross margin percentage. Once these metrics are sorted, divide your CAC with ARPA and multiply it by your gross margin. This computation will give you the number of months it takes to recover your CAC.

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