Metrics & Performance
Customer Acquisition Cost
Also Known As
CACAcquisition Cost
Customer Acquisition Cost (CAC) is the total cost of acquiring a new customer, including marketing, sales, and related expenses, divided by the number of new customers acquired.
What is CAC?
CAC measures how much you spend to acquire each customer. It's one of the most important metrics for understanding business efficiency and sustainability.
Calculating CAC
Simple Formula:
CAC = Total Sales & Marketing Costs / New Customers Acquired
Fully Loaded CAC:
CAC = (Sales Salaries + Marketing Spend + Tools + Overhead)
/ New Customers Acquired
CAC Benchmarks
| Business Type | CAC Range |
|---|---|
| Self-Serve SaaS | $50 - $500 |
| SMB SaaS | $500 - $5,000 |
| Mid-Market | $5,000 - $50,000 |
| Enterprise | $50,000 - $500,000 |
CAC Payback Period
CAC Payback = CAC / (Monthly Revenue per Customer × Gross Margin)
Target: <12 months for SMB, <18 months for enterprise
LTV:CAC Ratio
LTV:CAC = Customer Lifetime Value / Customer Acquisition Cost
| Ratio | Assessment |
|---|---|
| >3:1 | Healthy |
| 3:1 | Good |
| <3:1 | Concerning |
| 1:1 | Unsustainable |
Example Usage
“By optimizing their funnel, they reduced CAC from $500 to $300.”