Payback Period
Months required for a new customer to pay back their CAC.
Payback period measures how long it takes for the gross profit from a customer to recover what you spent to acquire them. Under 12 months is healthy for SaaS; under 6 is excellent. Payback period is a better short-term efficiency metric than LTV:CAC because LTV depends on long-term churn assumptions.
Formula
Payback period = CAC / (ARPU x Gross margin)