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.
Common questions
What is a good CAC payback period?
Around 12 months is a common healthy target for subscription and B2B businesses. Shorter frees cash to reinvest; much longer strains cash flow even with strong lifetime value.
How is payback period calculated?
Divide the cost to acquire a customer by the gross profit that customer generates per month. The result is the number of months to recover the acquisition cost.