What to enter
CAC is the cost to win one new paying customer. Stripe's CAC guide divides sales and marketing cost by the new customers you won. Use the same period and the same customers on both sides.
Enter CAC is for a cost you already have. From spend and new customers divides the spend by the count for you. A spend of 0 is a real zero. A blank field is missing, not zero.
Monthly ARPA is the average monthly revenue from one of those new customers, before serving costs. It is not your company's total revenue.
Gross margin is the share left after hosting, support, payment fees, and other costs to serve that revenue. Sales and marketing belong in the CAC, not here. The field runs from -100 to 100. Type -20 when serving the customer costs more than they pay.
Include monthly churn asks for customer churn, the share of this new group who stop paying each month. Revenue churn is a different percent, because price changes are mixed in. The rate stays the same every month, and month 1 counts every new customer as paying.
Compare a second scenario tries one other CAC, price, margin, or churn. It shows how many months sooner or later only when both sides have a month count. If either side is Never or Nothing to earn back, there is no gap to show.
Type digits with up to two decimals. A $, comma, or % sign is rejected. Currency changes the symbol only.
How to read the result
The main result is the months of gross profit it takes to cover the CAC. The line under it names the month the cost is covered. Never means these inputs never cover the cost. Nothing to earn back means the cost is exactly zero.
The table row Months if you ignore serving costs leaves the margin out. It's there for comparison. The main result is the payback.
$300 to win the customer, $50 a month, 80% margin
Monthly gross profit is $40.00. Payback is 7.5 months. The cost is earned back during month 8. Months if you ignore serving costs: 6.0.
How is CAC payback calculated?
Payback months are the acquisition cost divided by one month of gross profit from that customer.
Payback months
Payback months = CAC ÷ (monthly ARPA × gross margin)
Monthly ARPA is average revenue per account. Gross margin is the share left after serving costs. In the example above, monthly gross profit is $40.00, payback is 7.5 months, and the cost is earned back during month 8.
ChartMogul's payback definition and Stripe's payback guide both divide by monthly gross profit.
Why show months that ignore serving costs?
The row Months if you ignore serving costs divides CAC by monthly ARPA and leaves the margin out. It shows how far off a revenue-only payback can be.
In the example, that row is 6.0 months and the payback is 7.5. The 6.0 treats the whole $50 as profit, but hosting, support, and payment fees still come out of it.
What belongs in the CAC?
CAC is sales and marketing cost divided by the new paying customers you won. Stripe's CAC guide uses that ratio. The period and the customer group have to match. If your sales cycle is longer than the period, a same-month ratio is rough. Stripe also says there is no universal CAC target.
Serving costs belong in gross margin instead. Stripe's gross margin guide counts hosting, support, payment processing, and direct delivery as the cost of serving. Sales and marketing stay out of that margin.
With From spend and new customers, $10,000 of spend and 7 customers shows a CAC of $1,428.57. The months use the exact $10,000 ÷ 7, not the rounded figure. At $99 of monthly ARPA and a 70% margin, payback is 20.6 months, earned back during month 21.
When the cost needs separate lines for ads, pay, tools, and your own unpaid hours, start with the customer acquisition cost calculator. Bring the cash cost back here. Unpaid hours stay out of the payback unless you include them in the CAC you type.
What does monthly customer churn change?
With churn off, every new customer keeps paying. With churn on, the page follows the group as people leave.
Month 1 counts every customer you won. At 5% churn, month 2 counts 95% of the group, and each later month keeps 95% of the month before. The page adds up the gross profit from the customers still paying. The churn line shows the first month that running total reaches the CAC.
In the example above, the churn line reads: With 5% monthly churn: earned back during month 10. After 9 months the group has earned $295.80, short of $300. After 10 months it has earned $321.01.
The main result stays 7.5 months, earned back during month 8, because it assumes nobody leaves. A churn rate of 0 gives the same month as the main result.
When does the group never earn the cost back?
A steady churn rate caps the gross profit one customer can return. The cap is one month of gross profit divided by the churn rate. Below 100% churn, the running total gets closer to that cap but never reaches it. So a CAC equal to the cap is still never.
At $40.00 a month and 5% churn, the cap is $800.00. A CAC of $800.00 shows never, and the line says a customer returns at most $800.00 in gross profit. The main result can still show 20.0 months, because it ignores the people who leave.
At 100% churn, only month 1 pays. The cap is that one month of gross profit, and it is reached, so a CAC equal to it is earned back.
| CAC | Monthly churn | What you see |
|---|---|---|
| $300 | 5% | Earned back during month 10. The main result still shows 7.5 months. |
| $800 | 5% | never. The most gross profit is $800.00. |
| $40 | 100% | Earned back during month 1. Gross profit that month is $40.00. |
| $50 | 100% | never. The most gross profit is $40.00. |
The page checks up to 600 months. If the running total is still short of the CAC by then, the churn line says not within 600 months. That is not never. The cost is earned back in a later month the page doesn't check.
For example, a CAC of $399,000, monthly ARPA of $50, an 80% margin, and 0.01% churn. The main result shows 9,975.0 months, because it assumes nobody leaves. The churn line says not within 600 months.
The page doesn't label any result healthy or unhealthy.
What if the cost is zero, or gross profit is not positive?
A cost of exactly 0 shows Nothing to earn back, whatever the margin and churn. It is not shown as 0 months.
| What you entered | Main result | What else you see |
|---|---|---|
| CAC $0, margin 80%, ARPA $50 | Nothing to earn back | Gross profit is still $40.00 a month. |
| CAC $0, margin -20%, ARPA $50 | Nothing to earn back | Each customer still costs $10.00 a month more to serve than they pay. |
| CAC $300, margin 0%, ARPA $50 | Never | Each customer leaves $0.00 a month after serving costs. The revenue-only row still shows 6.0 months. |
| CAC $300, margin -20%, ARPA $50 | Never | Each customer costs $10.00 a month more to serve than they pay. |
| Spend $0.01 and 3 customers, ARPA $50, margin 80% | Under 0.1 | The CAC row shows Under $0.01. The cost is still above zero, and it is earned back during month 1. |
Does paying annually change the months?
No. The months count gross profit over the time you serve the customer. Cash can arrive on a different date.
ChartMogul's MRR definition spreads a recurring plan across its billing interval and leaves one-time charges out, so monthly revenue is not the cash in your account. The accounting standard IFRS 15 also counts revenue as the service is delivered.
The formula also uses one ARPA, one margin, and at most one churn rate. Expansion, later price changes, and discounts are not included.
How is payback different from lifetime value?
Payback counts the months until gross profit covers the CAC. Lifetime value is the gross profit you expect over the whole time a customer stays, if price, margin, and churn stay the same.
The customer lifetime value calculator estimates that gross profit. The LTV:CAC calculator divides it by acquisition cost and shows the no-churn payback next to the ratio. With the same ARPA, margin, and CAC, that payback matches the main result here. Lifetime value can be high while payback is still long.
For the revenue that covers the company's fixed costs, use the break-even MRR calculator. For one month of revenue, retention, and acquisition together, use the SaaS metrics calculator.