CAC (Customer Acquisition Cost)
The total cost of getting one paying customer. Marketing + sales spend in a period, divided by new customers from that period.
CAC is total customer acquisition spend ÷ number of new paying customers over the same period. Spend $10,000 on Google Ads and a salesperson's time in a month, acquire 200 new paying customers, your CAC is $50.
CAC is meaningful only against LTV (lifetime value). A $50 CAC for a customer who pays you $500 over their relationship is excellent. A $50 CAC for a customer who pays you $40 once is a money-losing business.
The healthy benchmark for most SaaS businesses is LTV ≥ 3× CAC — you make at least three times back over the customer's lifetime what you paid to acquire them. Below 3:1 and the business has unit-economics problems; above 5:1 and you're likely under-investing in growth.
CAC has two big sub-components worth tracking separately:
- Paid CAC: customers from ads, sponsorships, paid placements. Scales with spend but rises as you saturate.
- Organic CAC: customers from content, referrals, word-of-mouth. Lower per customer but takes time to build pipeline.
CAC almost always rises as a company scales — easy channels saturate, you spend on harder-to-convert audiences. Worth tracking monthly.
See also
- LTV (Lifetime Value) — The total revenue (or gross profit) you expect to earn from a customer across their entire relationship with you.
- LTV:CAC ratio — The relationship between what a customer is worth to you over their lifetime and what you paid to acquire them. The most important single number in unit economics.
- CAC payback period — The number of months it takes for the gross profit from a new customer to repay what you spent to acquire them.
- Unit economics — The revenue and costs associated with one customer (or one transaction). The fundamental health check for whether scaling makes the business better or worse.
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