How to calculate CAC payback period in SQL

What you need

CAC payback period is the number of months it takes for a customer's gross profit to repay what it cost to acquire them: CAC divided by monthly gross profit per customer. You need these columns, here from the sample file monthly.csv:

• revenue: revenue (net of discounts)
• cogs: cost of goods sold
• marketing_spend: marketing spend
• new_customers: new subscribers
• customers_end: subscribers at end of month
• mrr_end: MRR at end of month

CREATE TABLE monthly (
  month TEXT,          -- 'YYYY-MM'
  revenue INTEGER,
  cogs INTEGER,
  marketing_spend INTEGER,
  new_customers INTEGER,
  customers_end INTEGER,
  mrr_end INTEGER
);

Step by step

1. Load monthly.csv into a table called monthly. The table only needs the month column and the columns below.
2. Run the first query to get one row per month.
3. Run the whole-period query. It adds up each column first and divides once; averaging the monthly results gives a different, usually wrong, answer.

The queries

SELECT
  month,
  ROUND(1.0 * marketing_spend / NULLIF(new_customers, 0) / NULLIF(1.0 * mrr_end / NULLIF(customers_end, 0) * 1.0 * (revenue - cogs) / NULLIF(revenue, 0), 0), 2) AS cac_payback_months
FROM monthly
ORDER BY month;

SELECT ROUND(1.0 * SUM(marketing_spend) / NULLIF(SUM(new_customers), 0) / NULLIF(1.0 * SUM(mrr_end) / NULLIF(SUM(customers_end), 0) * 1.0 * (SUM(revenue) - SUM(cogs)) / NULLIF(SUM(revenue), 0), 0), 2) AS cac_payback_months
FROM monthly;

What you should get

Run against the sample data, the code above returns these values:

₹6,70,000 ÷ 868 ÷ (₹14,20,800 ÷ 6,643 × (₹28,28,700 − ₹15,39,900) ÷ ₹28,28,700) = 7.9 months

Notes for SQL

• Integer columns divide as integers in PostgreSQL, SQLite and SQL Server, so 3 / 4 gives 0. Multiplying by 1.0 (or 100.0) first makes the division decimal.
• NULLIF(x, 0) turns a zero denominator into NULL, so the query returns NULL for that row instead of failing with a division-by-zero error.
• Tested on SQLite and DuckDB. SUM, NULLIF and ROUND work the same in PostgreSQL, MySQL and BigQuery; SQL Server uses TOP instead of LIMIT where a query has one.

Where CAC payback period misleads

• Use gross profit per customer, not revenue, or payback looks shorter than it is.
• It ignores churn during the payback months. A stricter version discounts each month by the chance the customer is still there.
• Blended CAC hides channels with much longer payback.

The full explanation, with a calculator, is on the CAC payback period page.

Same metric, other tools

• CAC payback period in Excel and Google Sheets
• CAC payback period in Python (pandas)

Related metrics in SQL

• How to calculate customer acquisition cost in SQL
• How to calculate LTV to CAC ratio in SQL
• How to calculate average revenue per user in SQL
• How to calculate customer churn rate in SQL

Learn more about SQL

• Python and SQL for data analysis, side by side — 3 min read
• How to find out what changed in your sales data — 2 min read

About the data on this page

The figures come from a small made-up dataset, printed above in full so you can check every number by hand. Download it as monthly.csv. The results are computed from those rows when the page is built, and the Excel formulas, SQL and Python on these pages are run against the same rows before publishing, so the code and the answers agree.

To get these numbers from your own data without writing formulas, try AnalyzeIt: ask in plain words and it shows the working behind every figure.