Customer Acquisition Cost (CAC)

CAC tells you what it actually 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.