Payback Period

Payback Period - the payback period for the cost of attracting one client. Calculated as CAC ÷ (ARPPU × margin). For example: CAC = 4500 ₽, ARPPU = 1500 ₽/month, margin 60% → Payback Period = 4500 ÷ (1500 × 0.6) = 5 months.

Benchmarks by industry: consumer SaaS - up to 12 months, b2b SaaS - up to 18 months, e-com - up to 3-6 months, mobile games - up to 3 months. If the Payback Period exceeds the expected average life of a client, the business is structurally unprofitable at the acquisition level.

Payback Period and LTV/CAC are related metrics, but not interchangeable. LTV/CAC shows the final profitability, Payback Period shows the cash return rate. For a business with limited working capital, the Payback Period is more important: you can have an excellent LTV/CAC = 4×, but with a Payback Period of 36 months, you simply won’t have enough money to reach payback without external financing.

I regularly calculate the Payback Period by cohort: different acquisition channels give different periods. In one of the projects, contextual advertising gave a Payback Period of 4 months, and the target - 11 months with the same CAC. Reason: different quality and retention of clients from these channels. This cannot be seen without cohort analysis.

Payback period calculator →