What is CAC and how do you calculate it?

CAC (Customer Acquisition Cost) is the total cost to acquire one new customer. Formula: CAC = (Total Marketing Spend + Total Sales Spend) / Number of New Customers Acquired. Include all costs: advertising, content, tools, team salaries, and commissions.

What is a good LTV:CAC ratio?

The industry standard for healthy SaaS is 3:1 LTV:CAC — meaning each customer generates 3x what you spent to acquire them. Below 2:1 is concerning (losing money), above 5:1 suggests under-investment in growth. Most VCs look for 3:1 or higher.

What is CAC payback period?

CAC payback is how many months of customer revenue it takes to recover acquisition costs. Formula: CAC / (Monthly ARPU × Gross Margin). Under 12 months is good for most SaaS. Enterprise SaaS may accept 18-24 months with longer contracts.

Should I include salaries in CAC?

Yes. Include all fully-loaded costs: marketing and sales team salaries, commissions, benefits, tools/software, advertising, content creation, events, and any other acquisition-related expenses. Excluding costs understates your true CAC.

How can I reduce my CAC?

Key strategies: (1) Improve conversion rates at each funnel stage, (2) Focus on higher-converting channels, (3) Build organic/referral growth, (4) Shorten sales cycles, (5) Increase average deal size, (6) Better qualification to reduce wasted effort.

CAC Calculator

Calculate your Customer Acquisition Cost instantly. Get LTV:CAC ratio, CAC payback period, and AI-powered recommendations to improve efficiency.

Enter Your Values

Total Marketing Spend*

All marketing costs: ads, content, tools, team salaries

Total Sales Spend*

All sales costs: salaries, commissions, tools, travel

New Customers Acquired*

customers

Number of new paying customers this period

Average Revenue Per User (Monthly)

Monthly revenue per customer for LTV:CAC calculation

Monthly Churn Rate

For LTV:CAC calculation

Gross Margin

Gross margin percentage for adjusted LTV

Formula

CAC = (Marketing Spend + Sales Spend) / New Customers

Customer Acquisition Cost measures how much you spend to acquire one new customer. Lower CAC with maintained quality indicates efficient growth.

Customer Acquisition Cost (CAC)$1,000

$1000 CAC suggests enterprise sales motion.

Total S&M Spend$25,000

Marketing CAC$400

Sales CAC$600

Customer LTV$2,000

LTV (Gross Margin Adj)$1,600

LTV:CAC Ratio1.6:1

CAC Payback12.5 months

Is Your CAC Healthy?

Very EfficientLTV:CAC > 5:1 — consider investing more in growth

$0 – $1

HealthyLTV:CAC 3-5:1 — sustainable unit economics

$1 – $3

Needs ImprovementLTV:CAC 2-3:1 — work on efficiency

$3 – $5

UnsustainableLTV:CAC < 2:1 — losing money per customer

> $5

Source: SaaS Capital & OpenView Benchmarks

How to Calculate CAC

Enter your total marketing spend for the period
Enter your total sales spend (salaries, commissions, tools)
Enter the number of new customers acquired
Optionally add ARPU and churn rate for LTV:CAC calculation
View your CAC, LTV:CAC ratio, and payback period
Chat with our AI SaaS Analyst for optimization strategies

CAC Benchmarks by Segment

$100-$500

SMB SaaS CAC

$500-$2,000

Mid-Market CAC

$2,000-$10,000

Enterprise CAC

3:1 or higher

Healthy LTV:CAC

<12 months

Good CAC Payback

Source: SaaS Capital & OpenView 2024