Definition
CAC (Customer Acquisition Cost) is the cost to acquire a new paying customer. It's a core unit economics metric for SaaS and subscription businesses.
CAC formula
CAC = acquisition spend / new customers acquired
How to calculate CAC (step-by-step)
- Pick a time window (usually monthly) and a segment (channel, plan, geo).
- Sum acquisition spend for that window (paid spend + variable acquisition costs).
- Count new paying customers acquired in that window (not leads or trials).
- Divide spend by new customers to get CAC.
Benchmarks (rule of thumb)
- There is no universal 'good CAC' without knowing ARPA, margin, and retention.
- Use CAC payback (months) to compare channels more fairly when pricing differs.
- Track CAC by cohort: CAC often rises as channels saturate.
CAC metrics (paid vs fully-loaded)
- Paid CAC: ad spend (and variable creative/agency) / new customers (useful for channel optimization).
- Fully-loaded CAC: paid spend + sales/marketing salaries + tools / new customers (useful for planning).
- Blended CAC: includes all acquisition sources (paid + organic + outbound). Always label the definition.
What costs to include
- Paid media (ad spend), agencies, creative production (if variable).
- Sales/marketing tools (CRM, email, analytics) if you include them consistently.
- Salaries/commissions: include if you want a fully-loaded CAC (recommended for planning).
Common mistakes
- Using leads/trials as 'customers' (denominator mismatch).
- Comparing paid-only CAC to a fully-loaded CAC target (definition drift).
- Ignoring churn: low CAC can still be bad if customers churn quickly.
How to segment CAC
- By channel (paid search, paid social, partners, outbound).
- By customer segment (SMB vs mid-market vs enterprise).
- By cohort (month acquired) to see how CAC changes with scale.
What to pair with CAC
- LTV and LTV:CAC to understand sustainability.
- Payback period to understand cash efficiency.
- Churn/retention to validate that customers stick around long enough.