What is Churn-Adjusted Payback?
CAC payback adjusted for churn risk.
How to calculate it
Calculate Churn-Adjusted Payback as: CAC / (Gross margin per month × (1 − monthly churn)). Pull the inputs from your connected data and track the trend over time in your dashboard.
Examples
Example 1
$500 CAC / ($80 margin x (1 - 2% churn)) = ~6.4 months, slightly longer than naive payback.
Example 2
A $500 CAC against $80 monthly gross margin and 2% monthly churn -> about 6.4 months, slightly longer than the 6.25-month naive figure.
Why it matters
Churn-adjusted payback refines CAC payback by accounting for the risk that a customer churns before fully repaying their acquisition cost. It gives a more realistic view of unit economics in higher-churn businesses. Ignoring churn makes payback look faster and safer than it really is.
Benchmark context
Shorter is better; under 12 months is healthy for SaaS, and the gap between this and naive payback widens as churn rises.
Common pitfalls
Ignoring churn makes payback look better than it is.
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