++++ Plate 00 · SaaS CAC paybackCalculator
Ecosystem Strategy · See your payback with no signup

How long until a new customer pays back what you spent to get them?

CAC payback is the honest unit-economics number for an app: months of gross profit to recover acquisition cost. It is harder to game than LTV:CAC. Answer five questions, get your payback, your LTV:CAC, and your magic number, read against SMB-app benchmarks (not enterprise ones).

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By Taylor Sicard · early Shopify employee who built the partner program, founder of an app acquired by Tiny · the unit economics behind apps scaling toward an exit
The method behind the number
The unit economics that decide whether an app compounds.
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Method

How CAC payback is calculated

CAC payback equals CAC divided by ARPA times gross margin: the months of gross profit it takes one merchant to repay their acquisition cost. The calculator reads it alongside gross-margin LTV:CAC and the SaaS magic number (net-new ARR over prior-quarter sales and marketing spend), calibrated for SMB apps, not enterprise SaaS.

Under 12 monthsHealthy for an SMB app. Under 6 is fuel: you can compound spend with confidence.
12 to 18 monthsTight. SMB merchants pay monthly and churn monthly, so a long payback can outlive the customer.
Over 18 monthsEnterprise math on SMB reality. Cut CAC or lift ARPA before scaling acquisition.

Enterprise SaaS tolerates 18 to 24 month paybacks on multi-year contracts. Shopify apps do not have that luxury. Churn decides whether your payback ever completes, so run the churn-cost calculator next, then see what both numbers do to your multiple in the app valuation calculator. The full set of free Shopify app calculators is here.

Questions

Common questions

What's a good CAC payback for a Shopify app?
Under 12 months is the healthy target for a self-serve SMB app. 12 to 18 months is acceptable if retention is strong. Over 18 months is hard to sustain without outside funding, because you are financing customers for a year and a half before they pay you back.
What monthly churn is healthy for a Shopify app?
Apps serving SMB merchants normally run 3 to 5% monthly customer churn. Under 2% is best-in-class. Over 6% signals a fit problem, and it shortens lifetime and LTV fast, since lifetime is roughly 1 divided by monthly churn.
What is the SaaS magic number?
It is net-new annual recurring revenue divided by the prior period's sales and marketing spend. Over 0.75 means each dollar of S&M is buying recurring revenue efficiently, so it is safe to scale spend. Under 0.5 means fix the funnel before you pour in more.
Should I use LTV:CAC or CAC payback?
CAC payback is harder to game. LTV:CAC inflates the moment you over-estimate an SMB customer's lifetime, and most app founders do. Lead with payback in months, then use LTV:CAC and the magic number as guardrails.
Why are SMB app benchmarks different from enterprise SaaS?
Enterprise underwrites 18 to 24 month paybacks on multi-year contracts and 120%+ net revenue retention. Shopify apps sell to merchants who pay monthly and can uninstall in one click, so the payback window has to be shorter than the relationship is risky. Under 12 months is the SMB line for a reason.
What counts as CAC for a Shopify app?
Everything you spend to land a paying merchant: ads including app store ads, content, agency and creative costs, and the tools behind them, divided by new paying installs. If partners or affiliates earn a bounty, that is CAC too.