CAC payback calculator
How many months until a customer's gross profit covers the cost to acquire them.
Inputs
Results
Annual contribution = AOV × Purchases per year × Gross margin
Monthly contribution = Annual contribution / 12
Payback = CAC / Monthly contribution
Healthy DTC ranges 4-9 months. Above 12 months means CAC is too high relative to LTV.
Why this calculator is verified
CAC payback is the standard ecom-finance metric for whether unit economics work at the cohort level. The formula divides the upfront acquisition cost by the recurring monthly gross profit the customer generates. OpenView Partners and the SaaS finance literature use the identical formula for subscription businesses; the ecom variant just rolls repeat-purchase frequency into the recurring contribution number. Below 12 months is the conventional health threshold for DTC because it gives the brand a year to break even on the ad before the customer's likely churn or cohort decay sets in.
Worked example
DTC supplements, $60 CAC, $75 AOV, 4 buys/year, 35% margin
Annual contribution = $75 × 4 × 0.35 = $105. Monthly = $105 / 12 ≈ $8.75. Payback = $60 / $8.75 ≈ 6.9 months. Healthy. The same brand at $90 CAC would push payback to ~10.3 months, which is the band where the CFO starts asking questions.
Sources for the formula
- OpenView Partners, SaaS metrics primer (CAC payback)
Authoritative formula. Same math applies to ecom with repeat-purchase frequency rolling into monthly contribution.
- Bain & Company, customer-economics primer
Why CAC payback is the load-bearing metric for compounding businesses.
- Klaviyo benchmark, DTC repeat-purchase rates
Empirical baseline for the purchases-per-year input.
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