How do I calculate Payback period?

Use the formula(s) on this page. Keep inputs consistent by period and basis.

What are good benchmarks?

Benchmarks vary by model and stage. See Benchmarks on this page for ranges.

Inconsistent definitions/time windows; wrong basis (revenue vs gross profit).

Pitchkit

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GLOSSARY

Payback period

Months to recover CAC from gross profit.

Why it matters

Shorter payback recycles cash into growth faster. Many early-stage VCs prefer < 12 months for SMB SaaS.

Benchmarks

SMB < 12–15 months; Mid-market 12–18; Enterprise 18–24; usage-based varies by cohort.

Worked example

CAC $600; ARPU $60; GM 80% → Payback = 600 / (60×0.8) = 12.5 months.

Common pitfalls

Using revenue instead of gross profit; mixing paid vs blended CAC; not cohorting.

How to show in your deck

Back to Glossary

GLOSSARY

Payback period

Months to recover CAC from gross profit.

Why it matters

Shorter payback recycles cash into growth faster. Many early-stage VCs prefer < 12 months for SMB SaaS.

Benchmarks

SMB < 12–15 months; Mid-market 12–18; Enterprise 18–24; usage-based varies by cohort.

Worked example

CAC $600; ARPU $60; GM 80% → Payback = 600 / (60×0.8) = 12.5 months.

Common pitfalls

Using revenue instead of gross profit; mixing paid vs blended CAC; not cohorting.

Payback period

Why it matters

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Payback period

Why it matters

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Formulas

FAQs

Related terms

Why it matters

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Why it matters

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Formulas

FAQs

How do I calculate Payback?

What are good benchmarks?

Common pitfalls?

Related terms