GLOSSARY
CAC Payback Period
What is CAC Payback Period?
DefinitionCAC payback period is CAC divided by monthly contribution margin per customer - the cash-flow reality check that LTV:CAC hides.
Formula
Payback (months) = CAC ÷ Monthly contribution marginSubscription health brands typically recover CAC in 3–9 months; Hims & Hers justified a ~$929 CAC with 85% retention and sub-12-month payback (per analyses of its public filings), but a hair-loss brand’s 4–6 month results window pushes payback out before the first rebill even lands. As a worked example, a GLP-1 program with a $280 CAC and $180 of monthly contribution margin pays back in under two months and can reinvest aggressively. The subscription convention holds 12 months as the outer limit; beyond it, growth consumes working capital faster than cohorts return it.
Related terms
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