## 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 |