Customer Acquisition Cost (CAC)
The total cost of acquiring a new customer, including all sales and marketing expenses.
Why it matters
CAC determines how efficiently you convert spend into customers. Rising CAC without corresponding LTV growth signals trouble. Most VCs scrutinize this metric closely.
Formula
Include all costs: ad spend, salaries of sales/marketing teams, tools, events, and content production. Divide by the number of new customers gained in the same period.
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What's a good CAC?
B2B SaaS: $200-$2,000. SMB: $50-$500. Enterprise: $5,000-$50,000+. Always compare to CLV.
Related metrics
CLV
SaaSThe total revenue a business can expect from a single customer account over the entire duration of their relationship.
LTV:CAC
SaaSThe ratio of Customer Lifetime Value to Customer Acquisition Cost, measuring the return on each dollar spent acquiring customers.
CPA
MarketingThe average cost to acquire one paying customer through a specific marketing channel or campaign.