CAC payback
The number of months of gross profit required to recover the cost of acquiring a customer.
Why it matters
Often more revealing than LTV/CAC, because it is harder to flatter with assumptions. LTV depends on a churn estimate; payback depends mostly on facts.
A worked example
A $4,000 CAC on a customer generating $500 of monthly gross profit implies an 8 month payback.
What is typical
Under 12 months is generally viewed well for early-stage software. Beyond 24 months, growth becomes very cash-hungry.
Related terms
CAC
Customer acquisition cost: fully loaded sales and marketing spend divided by the number of new customers acquired in the same period.
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The number of months you can continue operating at your current net burn before running out of cash.
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VCTerminal models these terms on your real cap table, so you can see what a term sheet pays you before you sign it.
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