Customer Acquisition Cost (CAC) is the total cost to acquire a single new customer, including sales, marketing, and related overhead. CAC is calculated by dividing total acquisition spend by the number of new customers acquired in the same period. The CAC payback period measures how long it takes to recover that cost.
CAC = Total sales & marketing spend ÷ Number of new customers acquired
Include all sales salaries, marketing spend, tools, and overhead in the numerator.
Customer Acquisition Cost is the average cost to acquire one new paying customer. It includes all spending on sales and marketing: paid advertising, sales team salaries, marketing tools, events, and commissions. CAC is the denominator in the LTV:CAC ratio — the most important SaaS unit economics metric.
Blended CAC averages acquisition cost across all channels. Channel CAC breaks it down by source: paid search, content, outbound, referral, etc. Blended CAC gives you the overall picture; channel CAC tells you which channels are efficient and which are burning money. Most growth teams optimize channel CAC to shift spend toward the most efficient channels.
CAC payback period is the number of months it takes to recover the cost of acquiring a customer from their subscription revenue. A payback period under 12 months is excellent for B2B SaaS; under 24 months is acceptable. Longer payback periods mean more capital is tied up in growth, which increases risk. Reducing CAC or increasing ARPU both shorten the payback period.
| Level | CAC Score |
|---|---|
| CAC payback (excellent) | <12 months |
| CAC payback (good) | 12–18 months |
| CAC payback (acceptable) | 18–24 months |
| CAC payback (high risk) | >24 months |
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