The months to recover CAC is calculated as

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Multiple Choice

The months to recover CAC is calculated as

Explanation:
The months to recover CAC is the payback period for the customer acquisition cost in a recurring-revenue model. It shows how long it takes for the monthly revenue from a customer to cover the initial CAC. Therefore you divide the CAC by the average recurring revenue per month from that customer. This yields the number of months needed to break even on the acquisition. Other expressions don’t measure this time to break even: multiplying CAC by average recurring revenue doesn’t represent a time period, while the ratio of LTV to CAC is a profitability metric, not payback in months, and ARPU divided by churn gives the lifetime value, not the payback period.

The months to recover CAC is the payback period for the customer acquisition cost in a recurring-revenue model. It shows how long it takes for the monthly revenue from a customer to cover the initial CAC. Therefore you divide the CAC by the average recurring revenue per month from that customer. This yields the number of months needed to break even on the acquisition.

Other expressions don’t measure this time to break even: multiplying CAC by average recurring revenue doesn’t represent a time period, while the ratio of LTV to CAC is a profitability metric, not payback in months, and ARPU divided by churn gives the lifetime value, not the payback period.

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