Customer Acquisition Cost (CAC) is The total cost to acquire a new customer, calculated by dividing all sales and marketing expenses by the number of new customers acquired in a given period.
CAC tells you what it costs to land a new customer. It sounds straightforward until you realize most companies calculate it wrong. The question is always: what do you include? Just ad spend and sales commissions? Or do you also count SDR salaries, marketing ops headcount, tool costs, and onboarding expenses?
The Formula
CAC = Total Sales + Marketing Spend / Number of New Customers Acquired
CAC Variations That Matter
Blended CAC: All customers, all channels. The headline number but masks channel efficiency.
Paid CAC: Only customers from paid channels. Shows true acquisition efficiency without organic traffic inflating the numbers.
Fully-loaded CAC: Includes headcount, tools, overhead. The honest number most companies avoid calculating.
CAC by segment: Enterprise vs mid-market vs SMB. Enterprise CAC is 5-10x SMB, but so is the CLV.
CAC Payback Period
CAC payback period measures how many months it takes to recover the cost of acquiring a customer. Under 12 months is strong for SaaS. 12-18 months is acceptable. Above 24 months, you're financing customer acquisition with investor money or cash reserves, which only works if CLV justifies the wait.
The CLV:CAC ratio is the efficiency metric that ties acquisition cost to customer value. See RevOps KPIs for the full metrics framework.
Frequently Asked Questions
What is a good CAC for SaaS?
There's no universal benchmark because it depends on your deal size and CLV. What matters is the CLV:CAC ratio (aim for 3:1 to 5:1) and the CAC payback period (under 18 months for most B2B SaaS). A $50K ACV deal can justify a $15K CAC. A $5K ACV deal can't.
What costs should be included in CAC?
At minimum: marketing spend, sales team compensation (base + variable), and SDR costs. Fully-loaded CAC also includes marketing and sales tools, agency fees, event costs, content production, and allocated overhead. Be consistent in your definition quarter over quarter.
