When Do You Break Even?
Measure your CAC payback period and find out how long until each new customer pays for themselves. The faster you recoup, the faster you scale.
Total cost to acquire one customer
Average monthly revenue from one customer
Revenue minus cost of goods sold
Enter your metrics and click Calculate to see your payback period
How do you calculate CAC payback period?
CAC payback period is the number of months it takes to recover the cost of acquiring a customer from the gross profit they generate. Divide customer acquisition cost by monthly gross profit per customer. For most businesses a payback under 12 months is healthy and under 6 months is excellent. The faster you recoup CAC, the faster you can reinvest in growth.
In ecommerce the average CAC payback period is around 6 months, and the brands that know their number and keep it short are the ones that scale fastest.
The formula
Monthly Gross Profit
Monthly Revenue per Customer x Gross Margin %
Payback Period (months)
CAC / Monthly Gross Profit
Worked example
- Customer acquisition cost
- $500
- Monthly revenue per customer
- $150
- Gross margin
- 70%
- Monthly gross profit
- $105
CAC payback of 4.8 months (Excellent). Each customer covers their acquisition cost in under 5 months, leaving the rest of their lifetime as profit.
CAC payback period benchmarks
| Payback period | Rating |
|---|---|
| 6 months or less | Excellent |
| 6 to 12 months | Good |
| 12 to 18 months | Acceptable |
| 18 to 24 months | Needs work |
| Over 24 months | Critical |
Frequently asked questions
What is a good CAC payback period?
Under 12 months is healthy for most businesses and under 6 months is excellent. Longer payback ties up cash for longer and slows how fast you can reinvest in growth.
Why use gross profit instead of revenue?
Only gross profit is available to repay acquisition cost. Using revenue would ignore cost of goods and overstate how quickly a customer actually pays back.
How is payback different for ecommerce and SaaS?
Ecommerce often targets payback in a single order or a few months, while subscription businesses may accept 12 to 18 months because revenue recurs predictably over a long lifespan.
How do I shorten my CAC payback period?
Lower CAC by improving targeting and conversion rates, raise monthly revenue per customer through pricing or upsells, or improve gross margin so more of each payment repays acquisition.
Benchmarks and formulas last reviewed Q2 2026. Ad Prophet analyzes accounts spending $30K+/month on Google Ads.