CAC payback period.

Worked example

CAC is $100 and a customer pays $50 a month at a 40% margin, so monthly gross profit is $20 and simple payback = $100 / $20 = 5 months. With 10% of customers lost each month, the expected cumulative gross profit after n months is $20 x (1 - 0.9^n) / 0.1. That reaches $100 at n = ln(0.5) / ln(0.9) = 6.58 months. At 20% churn the lifetime gross profit is only $20 / 0.2 = $100 in total, never above the CAC, so there is no payback.

How it works

Simple payback = CAC / monthly gross profit per customer. Shopify defines CAC payback period as the time it takes to recoup the cost of acquiring a customer. Gross profit per month is revenue per customer per month x gross margin.

Payback with churn. This tool assumes a constant monthly churn rate c, so the share of customers still paying in month k is (1 - c)^(k-1). Expected cumulative gross profit after n months is gross profit x (1 - (1 - c)^n) / c. Setting that equal to CAC gives n = ln(1 - CAC x c / gross profit) / ln(1 - c). If CAC x c is at least the monthly gross profit, expected profit never reaches the CAC.

The churn adjustment is a modelling assumption of this calculator, not a published benchmark. Real churn is usually higher early on, which makes real payback longer than shown.

The first payment is assumed to arrive in month 1 and gross margin is held constant. Fixed costs are not included.

Sources and basis (opened 2026-10-15): Customer Acquisition Cost: How To Calculate and Lower It - Shopify. Everything else is arithmetic on your inputs.

Inputs are user-entered figures. Results are planning estimates, not financial advice or a forecast of future performance. Everything runs in your browser. Nothing you type is sent or stored.

FAQ

How do you calculate CAC payback period?

Divide CAC by the gross profit one customer produces per month. $100 / $20 = 5 months.

Why use gross margin instead of revenue?

Revenue includes the cost of the product and delivery. Payback should measure when the profit that remains pays back what you spent to win the customer.

What is a good CAC payback period?

It depends on your cash position and margins. A shorter payback recovers cash sooner, so compare it with how long you can fund ad spend before the money returns.

What if the result says payback never happens?

With the churn you entered, the expected lifetime gross profit per customer is below the CAC. Lower the CAC, raise margin or order value, or reduce churn.