CAC Payback Period

The number of months of a customer's revenue it takes to earn back the cost of acquiring them. Measures how long acquisition spend is underwater.

When you'd see it: Unit-economics and GTM-efficiency discussions, alongside CAC and LTV. A 12-month payback means a year to break even on each new customer.

Why it matters: Payback governs cash, not just profit. A business can have a great LTV:CAC ratio and still run out of money if every customer takes two years to pay back while growth is fast.

Common mistakes: Watching LTV:CAC but ignoring payback. The ratio says the unit is profitable eventually; payback says how long your cash is tied up getting there.