Work out how many months of gross profit it takes to repay the cost of acquiring a customer.
Simple payback divides the up-front cost by the recurring annual benefit to get the number of years before the customer acquisition has paid for itself. Everything after that point is net gain, which the lifetime figures make explicit. Payback is the first screen most buyers apply: a system that pays back inside its warranty period is a very different proposition from one that does not.
SaaS Payback Period
Payback (years) = Customer acquisition cost ÷ annual monthly gross profit per customer
Payback (years) = Customer acquisition cost ÷ annual monthly gross profit per customer Simple payback divides the up-front cost by the recurring annual benefit to get the number of years before the customer acquisition has paid for itself. Everything after that point is net gain, which the lifetime figures make explicit.
Payback is the first screen most buyers apply: a system that pays back inside its warranty period is a very different proposition from one that does not.
This calculator takes 3 inputs: Customer acquisition cost, Monthly gross profit per customer, Expected life. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.