What is CAC?
Customer Acquisition Cost
Customer Acquisition Cost (CAC) is the total cost of acquiring one new customer. Calculated as total marketing + sales spend divided by new customers acquired in the same period.
CAC = Total sales & marketing spend ÷ New customers acquiredDTC ecommerce: $15-$120 · SaaS SMB: $80-$250 · SaaS Enterprise: $5K-$40K · B2B services: $150-$600
- CAC
- Customer Acquisition Cost (CAC) is the total cost of acquiring one new customer. Calculated as total marketing + sales spend divided by new customers.
Why CAC matters
CAC is the single most important number in growth marketing. If you cannot profitably acquire a customer, nothing else matters. CAC should be measured monthly, split by channel, and compared to LTV (lifetime value). A healthy LTV:CAC ratio is 3:1 or better. Below that, you are either under-pricing or acquiring the wrong customers.
Worked example
Plug a real number into the formula to see CAC in action:
Numbers are illustrative. Try our Customer LTV Calculator for your real numbers.
Common mistakes with CAC
- 1
Looking at single-channel ROAS in isolation instead of blended MER. Last-click attribution overweights bottom-funnel channels and starves top-of-funnel.
- 2
Setting a uniform target across products with different margins. A 2× ROAS is profitable on 80% margin and unprofitable on 20%.
- 3
Optimizing CAC without measuring LTV. Cheap customers with bad retention destroy unit economics.
How to improve CAC
Run incrementality tests every quarter to validate which channels actually drive new revenue vs steal credit.
Build a unit economics dashboard separating CAC, LTV, contribution margin, and payback by channel and cohort.
Establish a contribution margin floor for each channel, pause spend when margin drops below threshold for 14 days.
Common questions about CAC
What is CAC?▾
How is CAC calculated?▾
What is a good CAC benchmark?▾
Why does CAC matter for marketing teams?▾
Related terms
Need help applying CAC to your business?
Book a free 30-min audit. We will benchmark your CAC against your industry and flag what to fix first.
Book a free audit