Definition
Customer Acquisition Cost (CAC) is the total sales and marketing spend required to acquire one new customer over a period, calculated by dividing that spend by the number of new customers won. It's a foundational unit-economics metric for judging whether growth is efficient.
Why it matters
CAC only makes sense next to the value a customer returns. Watching CAC against LTV tells you whether you can profitably spend more to grow — or whether the model leaks.
How it works
- 1Sum all sales and marketing costs for a period (people, ads, tools).
- 2Count the new customers acquired in that same period.
- 3Divide total cost by new customers to get CAC.
- 4Compare CAC to LTV and to your payback period.
Common mistakes
- Leaving out salaries, tools, or overhead and understating true CAC.
- Measuring CAC without LTV, so efficiency is meaningless.
- Blending wildly different channels into one misleading average.
Best practices
- Track CAC by channel and segment, not just blended.
- Pair CAC with LTV:CAC ratio and payback period.
- Lower CAC by improving targeting and qualification, not just cutting spend.
Frequently asked questions
A common benchmark for healthy B2B SaaS is roughly 3:1, with CAC payback inside 12 months — but the right target depends on margins, growth stage, and capital.
See it in practice. Vantera puts concepts like this to work — qualifying in-market buyers and drafting outreach from real activity, on your approval. Start free →