Customer Acquisition Cost Calculator
Calculate the cost of acquiring new customers
CAC Formulas
Understanding Customer Acquisition Cost
Customer Acquisition Cost (CAC) measures how much money a company spends to acquire a new customer. It includes all marketing and sales expenses divided by the number of new customers gained. A SaaS company spending $100,000 on marketing to acquire 500 customers has a CAC of $200.
CAC is crucial for understanding business unit economics. If it costs more to acquire a customer than they'll ever pay you, the business model is broken. The LTV:CAC ratio compares lifetime value to acquisition cost—healthy businesses target 3:1 or better.
CAC varies dramatically by industry and business model. B2B companies often have higher CAC but also higher LTV. Consumer apps may have low CAC but also lower LTV. The key is ensuring CAC is sustainable relative to what customers pay over time.
CAC Benchmarks
LTV:CAC > 3:1
Healthy ratio. Customers worth 3x+ what you spend to acquire them.
LTV:CAC 1-3:1
Marginal. May work but leaves little room for error or growth investment.
LTV:CAC < 1:1
Unsustainable. Losing money on every customer acquired.
Payback < 12 months
Ideal payback period. Longer means more capital required for growth.
CAC by Industry
| Industry | Typical CAC | Target LTV:CAC | Notes |
|---|---|---|---|
| SaaS B2B | $200-$2,000 | 3:1+ | High LTV offsets CAC |
| E-commerce | $10-$50 | 3:1+ | Lower CAC, lower LTV |
| Consumer Apps | $1-$5 | 3:1+ | Volume-dependent |
| Financial Services | $100-$500 | 5:1+ | High LTV customers |
| Marketplace | $50-$200 | 3:1+ | Both sides matter |
Reducing CAC
Improve Conversion Rates
Better landing pages, clearer value props, and optimized funnels lower CAC without cutting spend.
Target Better
Focus on ideal customer profiles. Quality leads cost more but convert better, lowering effective CAC.
Leverage Referrals
Word-of-mouth and referral programs have near-zero CAC. Invest in customer success.
Optimize Channels
Track CAC by channel. Double down on efficient channels, cut or improve underperformers.
Frequently Asked Questions
What costs should I include in CAC?
Include all sales and marketing costs: ad spend, content creation, marketing team salaries, sales team salaries, tools/software, events, and any other costs directly related to acquiring customers. Exclude customer success and support costs.
How do I calculate LTV for LTV:CAC ratio?
LTV = Average Revenue per Customer × Average Customer Lifespan. For subscriptions: (Monthly Revenue × Gross Margin) ÷ Monthly Churn Rate. Use gross margin to get true profit, not just revenue.
What's a good payback period?
Under 12 months is ideal for most businesses. SaaS companies often target 12-18 months. Longer payback requires more working capital to fund growth. VC-backed startups may tolerate longer payback for faster growth.
Should I calculate CAC by channel?
Yes. Overall CAC is useful, but channel-specific CAC reveals where to invest. Paid search, social ads, content marketing, and outbound sales each have different CAC profiles. Optimize the mix based on efficiency.
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