Customer Acquisition Cost (CAC)
The total cost of acquiring a new customer, including marketing spend, sales salaries, tools, and overhead, divided by the number of new customers acquired in a given period.
Why CAC Matters More Than You Think
Most SaaS founders track CAC like a vanity metric — they know the number but don’t use it to make decisions. That is a mistake. CAC is the single best predictor of whether your go-to-market is working or burning cash.
If your CAC is climbing quarter over quarter, something in your funnel is broken. If it is dropping, you have found a channel or message that resonates. Either way, CAC tells you where to double down and where to cut.
How to Actually Calculate It
The formula is simple: Total Sales + Marketing Spend / New Customers Acquired. The hard part is deciding what counts as “spend.” Include everything: salaries, commissions, tools, ad spend, content production, events, contractor fees. If someone touches the revenue pipeline, their cost goes in the denominator.
A common mistake is excluding overhead. Your CRM costs money. Your marketing automation platform costs money. Your SDR’s laptop costs money. Leave those out and you are lying to yourself about your economics.
CAC by Channel
Not all customers cost the same to acquire. Break your CAC down by channel:
| Channel | Typical B2B SaaS CAC | Time to Close |
|---|---|---|
| Organic/SEO | $200-800 | 30-60 days |
| Paid Search | $1,500-5,000 | 14-30 days |
| Outbound | $3,000-15,000 | 60-120 days |
| Partner/Referral | $500-2,000 | 30-45 days |
| Events | $5,000-20,000 | 90-180 days |
The LTV:CAC Ratio
Your CAC means nothing without context. A $10K CAC is great if your LTV is $100K. It is terrible if your LTV is $15K. The benchmark: 3:1 or higher. Below 3:1, you are spending too much to acquire. Above 5:1, you are probably under-investing in growth.
Frequently Asked Questions
What is a good CAC for a B2B SaaS company?
For B2B SaaS, a good CAC depends on your ACV. Enterprise SaaS ($50K+ ACV) can sustain $15K-30K CAC. Mid-market ($10K-50K ACV) should target $5K-15K. SMB SaaS should aim for under $2K. The real metric is LTV:CAC ratio — anything above 3:1 is considered healthy.
How do you calculate CAC?
Total sales and marketing spend (salaries, tools, ad spend, content, events) divided by the number of new customers acquired in the same period. Include fully loaded costs — if your SDR team costs $400K/quarter and you close 40 deals, your sales-assisted CAC is $10K per customer.
What is blended vs paid CAC?
Blended CAC includes all acquisition costs across all channels. Paid CAC isolates only paid acquisition spend. Investors want to see both — blended shows efficiency at scale, paid shows unit economics of growth investment. If your blended CAC is low but paid CAC is high, you are over-relying on organic and word-of-mouth.
