1. Your unit economics
Enter your numbers, then click Calculate payback.
Result
| Measure | Value |
|---|
Churn-adjusted payback in months, by CAC and monthly churn
“never” means expected gross profit does not cover CAC within 120 months. Only CAC and churn change across the table.
The model, and what it leaves out
- Gross profit per month is revenue per customer x gross margin, collected at the start of each month from month 0.
- Churn is geometric: a customer is still paying in month t with probability (1 - churn)^t. Expansion scales surviving revenue by (1 + expansion) each month.
- Simple payback is CAC / monthly gross profit. Churn-adjusted payback is the first whole month at which expected cumulative gross profit reaches CAC, checked against the closed form m x (1 - r^n) / (1 - r).
- LTV is expected gross profit over the customer's lifetime, monthly gross profit / (1 - r) with r = (1 - churn)(1 + expansion); the discounted figure multiplies r by your monthly discount factor.
- Maximum CAC is the expected cumulative gross profit at your target month: spend more than this and payback slips past the target.
- Not modelled: churn that differs by tenure (early churn is usually higher), annual prepay cash timing, sales-cycle delay before revenue, discounts, taxes, and the difference between blended and channel CAC. Enter fully-loaded CAC: paid spend plus sales and marketing salaries, tools and commissions.
Common questions
What is a good CAC payback period for SaaS?
It depends on who you sell to. Twelve months or less is a commonly quoted target for SMB and self-serve products, and longer paybacks are more common in enterprise sales where contracts are multi-year and retention is higher. Treat any benchmark as a starting point and compare against your own cohorts and how much cash you can afford to tie up.
How do you calculate CAC payback?
The simple formula is CAC divided by monthly gross profit per customer: monthly revenue x gross margin. This calculator also reports a churn-adjusted payback, the first month at which expected cumulative gross profit, after some customers have left, covers CAC. When churn is high the adjusted figure is materially longer.
How is LTV calculated here?
LTV is expected gross profit over a customer's lifetime: monthly gross profit divided by monthly churn when there is no expansion. With expansion the divisor becomes 1 minus (1 - churn) x (1 + expansion). A second figure discounts cash at your cost of capital.
What is a good LTV:CAC ratio?
3:1 is the most quoted rule of thumb. Much higher can mean you are under-investing in growth; under 1:1 means each customer loses money on expectation. It is a prompt to check your own cohorts, not a target to optimise blindly.
What should CAC include?
Everything spent to win the customer in the period: paid media, sales and marketing salaries and commissions, tools, and agency fees, divided by new customers won. Leaving out salaries is the most common way payback is understated.
Is this financial advice?
No. It applies simple arithmetic to the numbers you enter and does not replace your own cohort data or a qualified adviser.