{
  "rogueId": "sales.cac_payback_period",
  "slug": "cac_payback_period",
  "domain": "sales",
  "defaultLabel": "CAC Payback Period",
  "description": "Number of months required for the gross profit generated from a new customer's ARR to recover the fully-loaded S&M spend used to acquire them. The single most decision-useful efficiency metric at the board level — it directly connects acquisition cost, ACV, and gross margin into one \"how long until we break even on this customer\" answer. Per the SMSB standard, the calculation must use gross-margin-adjusted ARR in the denominator (not raw ARR) to be cross-company comparable. Common pitfall: using raw ARR understates payback by ~25–30 percentage points and breaks comparability with peer benchmarks.",
  "fieldType": "number",
  "unit": "months",
  "maturity": "general",
  "suggestedForStages": [
    "seriesA",
    "seriesB",
    "seriesC",
    "public"
  ],
  "defaultOwningFunctions": [
    "Sales",
    "Finance"
  ],
  "stageRelevance": {
    "seriesA": "core",
    "seriesB": "core",
    "seriesC": "core",
    "public": "core"
  },
  "definitionSource": {
    "tier": "published",
    "sourceName": "SaaS Metrics Standards Board",
    "sourceUrl": "https://www.saasmetricsboard.com/cac-payback-period",
    "sectionRef": "CAC Payback Period",
    "publicationDate": "2023-01-01",
    "attributionNotice": "Metric definitions reference standards published by the SaaS Metrics Standards Board (saasmetricsboard.com). imboard is not affiliated with, endorsed by, or a member of SMSB."
  },
  "formula": "CAC Payback (months) = CAC / (Monthly New ARR × Gross Margin %). Per SMSB §CAC Payback Period: numerator is fully-loaded CAC (same definition as the CAC line), denominator uses gross-margin-adjusted monthly new ARR so the metric is comparable across companies with different cost structures.",
  "whyItMatters": "The decision-relevant single number for \"is the acquisition motion working\" — sub-24 months signals capital-efficient growth; > 36 months means each dollar of S&M is locking up cash for too long to justify scaling spend.",
  "interpretationGuidance": "Per the SaaS-investor convention reflected in KBCM/Sapphire SaaS Survey 2024 benchmarking: < 24 months gross-margin-adjusted payback is healthy; 24–36 months is acceptable for early-stage / up-market motions; > 36 months requires either an explicit path to compress (motion change) or a strategic rationale (e.g. multi-year deferred-revenue contracts with strong retention).",
  "relatedKpiIds": [
    "sales.cac",
    "sales.new_cac_ratio",
    "sales.blended_cac_ratio",
    "sales.gross_margin",
    "sales.new_business",
    "sales.arr"
  ]
}