When it comes to CAC payback, investors have specific benchmarks across different industries. Here’s the lowdown on what’s good, bad, and downright ugly.

🎢 CAC payback benchmarks by company size

To understand how CAC payback varies, look at the table below. It shows the number of months it takes to recoup acquisition costs based on company size or annual revenue. These benchmarks have remained relatively stable over the past three years.

Smaller companies (VSMBs) with fewer than 20 employees should target a CAC payback of 9 months, aiming for an exceptional 2-month payback if possible. Larger enterprises with over 1,000 employees should aim for a 14-month payback, with a 9-month payback being exceptional.

🇺🇸 US vs. European CAC payback: key differences

European benchmarks show lower CAC payback periods in the early stages. Around $10M or €10M, CAC payback periods equalize with international standards. European companies are slightly more efficient early on but align with global benchmarks as they grow.

Investor expectation: According to David Skok, a CAC payback period of less than 12 months is ideal for all SaaS companies.

☄️ CAC payback benchmarks by revenue

The cost of acquiring a customer varies significantly based on the revenue generated. Here's a look at CAC payback periods by company revenue from the OpenView 2022 SaaS benchmarks:

A high CAC payback period leads to slow profitability, making your business less attractive to investors. Slow profitability means it takes longer to generate returns on investments, which can deter potential investors looking for quicker gains.

👽 Three mistakes you might be making

• Thinking there’s a single gold standard: A healthy CAC payback depends on your net dollar retention (NDR). Different businesses have different benchmarks.

• Believing sales & marketing are the only costs of acquisition: product-led growth (PLG) companies also invest heavily in R&D as part of their customer acquisition strategy.

• Underestimating your true CAC  payback: Adjust for gross margin and consider CAC payback on a revenue basis (vs. cash basis) to get an accurate measure.