What is Customer Acquisition Cost (CAC)?
Average cost to acquire one new customer.
How to calculate it
Calculate Customer Acquisition Cost (CAC) as: Total sales & marketing spend / New customers acquired. Pull the inputs from your connected data and track the trend over time in your dashboard.
Examples
Example 1
Spend $50,000 on sales & marketing in a quarter and acquire 100 customers -> $500 CAC. Include salaries and tools, not just ad spend.
Example 2
A company spends $120k on sales and marketing in a quarter and adds 150 customers -> $800 CAC. If a customer is worth $3,200 in lifetime value, the 4:1 ratio is healthy.
Why it matters
CAC is the average cost to acquire one new customer and is fundamental to deciding whether growth is profitable and sustainable. Read alongside lifetime value, it determines how much you can afford to spend to grow and still build a healthy business. A rising CAC without a matching rise in deal size or retention is an early warning that acquisition is becoming inefficient.
Benchmark context
There is no universal number; judge it against LTV, aiming for an LTV:CAC of 3:1 or better, and against a payback period under 12 months for SaaS. Always include fully loaded costs (salaries, tools, overhead), not just ad spend.
Common pitfalls
Excluding salaries and overhead understates true CAC.
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