Revenue
Payback period
Definition of
Payback period in SaaS refers to the amount of time it takes for a company to recover the cost of acquiring a new customer through subscription-based revenue. It is calculated by dividing the cost of customer acquisition by the monthly recurring revenue (MRR) generated from that customer. The payback period is a key financial metric for SaaS companies as it provides insight into the efficiency of their sales and marketing efforts and helps to determine the profitability of acquiring new customers. A shorter payback period indicates that a company is able to recoup its customer acquisition costs quickly, while a longer payback period may suggest that a company's sales and marketing efforts need to be improved to generate a higher return on investment.
The amount of time it takes to recover the cost of acquiring a customer. If you spend $100 to acquire a customer who pays you $10 a month, your payback period is 10 months.
