Payback period is the time it takes for a customer to generate enough gross profit to cover what you spent to acquire them. It is the cash-flow companion to CAC: a healthy LTV:CAC ratio still hurts if payback takes too long.
Why payback matters as much as CAC
Two channels can share a CAC and an LTV but differ wildly on how fast the money comes back. A 3-month payback funds the next month of ads; an 18-month payback starves growth even when the unit economics look fine on paper. Payback is a cash-flow constraint, not a profitability one.
A common benchmark
Many B2B and subscription businesses aim to recover CAC within roughly 12 months. Longer is survivable with funding; much longer without it forces you to slow spend regardless of how good the LTV:CAC looks.