CAC Payback Period measures how many months it takes a cohort of customers to produce enough Gross Profit to pay back the sales and marketing expenses it took to acquire those customers.
For monthly aggregation, new customers acquired in a month are compared to S&M expenses for the prior month, to account for the lag between sales and marketing activities and a customer producing revenue. For month y (e.g., January 2021):
The above formula also applies to quarterly aggregation, with the units changing to quarters. For annual aggregation, S&M from the same year is used, and the units are years.