Why can the CAC-payback floor exceed the margin floor?

A high CAC or short payback target requires more monthly gross profit than the margin target alone.

Does this include churn or lifetime value?

No. Use the separate CLV calculator for a constant-retention scenario; neither tool predicts retention.

Should fixed costs be included in variable cost?

Not unless they truly vary per customer. Fixed overhead requires a volume assumption and belongs in a broader break-even model.

SaaS Monthly Price Floor Calculator

Test whether gross-margin and simple CAC-payback targets imply the same minimum price.

Two transparent price floors

Binding constraint identified

Achieved margin and payback shown

CurrencyVariable cost per customer / monthRecurring hosting, support, payment, or other costs that vary with one customer.Customer acquisition costFully loaded acquisition cost per new paying customer for the modeled channel.Target gross margin (%)Target CAC payback (months)Maximum months of constant monthly gross profit allowed to recover CAC.

How to Model a SaaS Price Floor

Use per-customer monthly costs and a CAC measured for the same customer definition.

Choose a display currency; no exchange-rate conversion occurs.

Model segments separately

Support load, payment fees, CAC, and willingness to pay often vary by plan or channel. One blended average can conceal unprofitable segments.

What the SaaS Price Floor Means

The gross-margin floor leaves the requested share of price after entered variable cost. The payback floor creates enough constant monthly gross profit to recover CAC within the target months. The higher amount satisfies both mathematical constraints. It is not an optimized market price.

SaaS Price Floor Examples

Gross-margin constraint binds

Monthly unit-economics targets

variableCostPerCustomerPerMonth:20

customerAcquisitionCost:120

targetGrossMarginPercent:80

targetCacPaybackMonths:12

Minimum modeled monthly price

100 monthly price floor

The margin floor is 100 while the payback floor is 30. At 100, monthly gross profit is 80 and simple CAC payback is 1.5 months.

CAC-payback constraint binds

Monthly unit-economics targets

variableCostPerCustomerPerMonth:10

customerAcquisitionCost:600

targetGrossMarginPercent:50

targetCacPaybackMonths:6

Minimum modeled monthly price

110 monthly price floor

The margin floor is 20, but 100 monthly gross profit is needed to recover 600 CAC in six months.

Treat annual plans separately

Upfront annual cash collection, discounts, churn, and service duration require a cash-flow model beyond this monthly floor.

Frequently Asked Questions

No. It is only the lowest monthly amount satisfying the two entered arithmetic constraints.

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SaaS Margin and CAC-Payback Price Floors

The model rearranges gross-margin and simple payback identities. It does not import an industry benchmark or claim that either target is appropriate.

Formula

price = variable cost ÷ (1 − target gross margin)

Gross-margin floor

price = variable cost ÷ (1 − target gross margin)

CAC-payback floor

price = variable cost + CAC ÷ target payback months

Combined floor

monthly price floor = max(margin floor, payback floor)

Scientific Background

Pricing is a strategic decision involving customer value and demand, not only cost. The U.S. Small Business Administration advises considering costs, market research, and competitive context; this calculator deliberately covers only two entered unit-economics constraints.