SaaS EconomicsCAC
What is CAC (Customer Acquisition Cost)?
Customer Acquisition Cost (CAC) is the total sales and marketing investment required to win one new paying customer during a given period. It is calculated by dividing sales and marketing expenses by the number of new customers acquired in the same period. CAC is used with LTV and payback period to assess acquisition economics.
Formula
CAC = Total Sales & Marketing Spend / New Customers AcquiredInclude all costs: salaries, commissions, ad spend, software, events, and agency fees. New customers are gross new logos, not net (do not subtract churned customers). Example: $50,000 spent in Q1, 100 new customers. CAC = $500.
Benchmarks and interpretation
- First Page Sage reports B2B SaaS CAC averages by industry and customer category from its 2019-2024 client data; its report does not define the category thresholds or included costs
- Bessemer Venture Partners' cloud-company guidance uses CAC-payback targets under 12 months for SMB, 18 months for mid-market, and 24 months for enterprise; these are targets, not industry averages
- Compare CAC only when the acquisition channel, customer segment, period, and included costs match
When to use CAC
- Setting channel-level budget allocation based on CAC efficiency
- Calculating the CAC Payback Period to understand cash flow requirements
- Comparing blended CAC against channel-specific CAC to find inefficiencies
- Justifying growth investments to finance and board stakeholders
Common mistakes
- Excluding fully-loaded costs such as sales team salaries and benefits, which understates true CAC
- Calculating CAC on a monthly basis when sales cycles span multiple months, causing attribution errors
- Using net new customers (after churn) instead of gross new customers, which inflates CAC
Practical tips
- Calculate CAC separately by channel (SEO, paid, referral) to find which channels have the best LTV:CAC
- Match acquisition spending to the customers it generated, allowing for your actual sales cycle
- Document which sales and marketing costs you include in CAC. Account for onboarding and service costs consistently when assessing payback.
Related terms
Free CAC Calculator
Enter your inputs in the free CAC Calculator and review the result alongside its guidance.