What should be included in CAC?

Include all sales and marketing costs: salaries, ads, tools, events, content, and commissions. Exclude product and engineering costs. Use the same period for spend and new customers.

What is a good CAC for SaaS?

A good CAC depends on your LTV and segment. The LTV:CAC ratio matters more than the absolute number. Aim for 3:1 or higher. SMB SaaS often targets $200-$500 CAC; enterprise can be $2,000+.

How do I reduce my CAC?

Focus on organic channels, improve conversion rates, optimize ad spend, and increase referral. Product-led growth can significantly lower CAC compared to sales-led approaches.

Customer Acquisition Cost for SaaS Founders

What is Customer Acquisition Cost?

Customer Acquisition Cost (CAC) is how much you spend to acquire one new customer. It includes all sales and marketing expenses divided by new customers won.

Why Customer Acquisition Cost matters for SaaS founders

CAC tells you the cost of growth. Paired with LTV, it shows whether your growth is sustainable. High CAC with low LTV is a red flag. Investors scrutinize this metric.

How to calculate Customer Acquisition Cost

Divide total sales and marketing spend in a period by the number of new customers acquired in that same period.

CAC = Total Sales & Marketing Spend / New Customers

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Customer Acquisition Cost Calculator

Total sales & marketing spend ($)

New customers acquired

Example calculation

$25,000 spend / 50 new customers
$500 per customer

Result: $500

Each new customer costs $500. If your LTV is $1,500, you have a healthy 3:1 LTV:CAC ratio.

Benchmarks & best practices

Early-stage: Early-stage CAC varies by channel. $100-$500 is common for PLG, $500-$2,000 for sales-led.
Healthy range: Healthy CAC depends on LTV. Aim for LTV:CAC of 3:1 or better. Payback under 12 months is ideal.
Warning range: CAC above LTV or payback over 24 months suggests unsustainable unit economics.

Frequently Asked Questions

What should be included in CAC?: Include all sales and marketing costs: salaries, ads, tools, events, content, and commissions. Exclude product and engineering costs. Use the same period for spend and new customers.
What is a good CAC for SaaS?: A good CAC depends on your LTV and segment. The LTV:CAC ratio matters more than the absolute number. Aim for 3:1 or higher. SMB SaaS often targets $200-$500 CAC; enterprise can be $2,000+.
How do I reduce my CAC?: Focus on organic channels, improve conversion rates, optimize ad spend, and increase referral. Product-led growth can significantly lower CAC compared to sales-led approaches.