Payback Calculator

Payback period: when do you recover the investment?

Payback is the time required to recover an investment. Simple version: payback = investment / annual_cash_flow — does not consider the time value of money. Discounted payback counts periods until accumulated NPV ≥ 0. Example: a machine costing R$ 100,000 that generates R$ 25,000/year has a simple payback of 4 years. In SaaS, CAC payback = CAC / (MRR · gross_margin). Main limitation: it ignores cash flows after the payback point — for full project evaluation, pair with NPV and IRR.

Applications and rules of thumb

Used for capex analysis in companies, marketing campaign ROI, build vs buy decisions, and as a quick screen for startups (CAC payback < 12 months is the common benchmark). Shorter payback = lower risk, but also tells you nothing about long-term return — a 2-year payback project may still be worse than a 4-year one with much higher post-payback flows.

FAQ

Simple vs discounted payback — which to use? Discounted payback is more accurate (uses discounted cash flows) but harder to compute. Use simple payback as a screening filter and discounted/NPV for final decisions.

Why not just use NPV? Payback answers "how long is my money at risk?" — useful for liquidity-constrained companies and risk assessment. NPV answers "how much value is created?". They complement each other.

What's a good CAC payback in SaaS? Under 12 months is acceptable; under 6 months is excellent. Above 18-24 months suggests CAC is too high or pricing too low.