CAC Payback Estimate Calculator
How many months of entered gross contribution cover acquisition cost? Check the formula, a worked example and the stated measurement limits.
Result for the values shown.
Calculations run in your browser.
What to enter
| Input | Meaning and units |
|---|---|
| Acquisition cost per account (currency/account) | Enter acquisition cost per account in currency/account. Use the measurement basis described below. |
| Monthly ARPA (currency/account/month) | Enter monthly arpa in currency/account/month. Use the measurement basis described below. |
| Gross margin (%) | Enter percentage units: 80 means 80%, not 0.8. |
Understanding your result
Compare scenarios for price, delivery cost and acquisition spend. Reconcile with observed cohort cash collection because payment timing can differ from recurring revenue.
Common mistakes
- CAC divided by revenue instead of contribution understates contribution payback time.
- The modeled account may churn before reaching payback.
Check your calculation
- Use the worked example as a known reference case, then change one input at a time and check the direction and units of the response.
Choose a consistent measurement basis
Use fully loaded acquisition cost if that is the intended CAC definition. Align account, revenue and margin bases; costs allocated to media alone produce a media-only payback estimate.
A second independently worked case
Zero allocated acquisition cost gives zero modeled payback time. Inputs: Acquisition cost per account: 0 currency/account; Monthly ARPA: 100 currency/account/month; Gross margin: 75 %. Results: Monthly contribution per account: 75 currency/account/month; Modeled payback time: 0 months.
Precision and output units
Displayed results: Monthly contribution per account in currency/account/month, rounded to 2 decimal places; Modeled payback time in months, rounded to 3 decimal places. Display rounding does not establish the precision of the original measurements or estimates.
Calculation checks, sources and review limits
How many months of entered gross contribution cover acquisition cost?
How many months of entered gross contribution cover acquisition cost? Check the formula, a worked example and the stated measurement limits.
Common uses
- How many months of entered gross contribution cover acquisition cost
- Compare CAC Payback Estimate across scenarios under matching definitions.
How it works
Calculate monthly gross contribution from ARPA and margin, then divide acquisition cost by that positive contribution. This models a stable account remaining active through payback.
Worked example
100 × 75% = 75 monthly contribution; 600 ÷ 75 = eight months. Enter acquisition cost per account 600 currency/account, monthly arpa 100 currency/account/month, gross margin 75 %. The independently worked result is monthly contribution per account 75 currency/account/month; modeled payback time 8 months. Compare this example with your reporting definitions before substituting your own figures.
FAQ
Why divide by contribution rather than revenue?
Revenue must also cover the included service or product costs. Dividing CAC by revenue omits that cost burden and can understate the time needed to recover acquisition cost from gross contribution.
What if the account cancels before payback?
The stable-account scenario will not be realized for that account. Check observed cohort retention and contribution instead of treating the arithmetic payback as a guarantee.