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GLOSSARY

What is CAC payback period? (payback period)

DEFINITION

CAC payback period is how many months it takes a customer’s gross margin to repay what it cost to win them. Divide CAC by monthly gross margin per customer.

A shorter payback frees cash to reinvest. Skok’s guideline for subscription businesses is to recover CAC within 12 months, noting that exceptions exist.

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