What is Customer Acquisition Cost (CAC)?

Customer Acquisition Cost is the average amount of money you spend to acquire one new customer. It’s one of the most important metrics for any business, especially for SaaS companies, startups, and e-commerce businesses.

Why does CAC matter?

• Profitability: Helps you understand if you’re spending too much to acquire customers compared to their value
• Budget Planning: Guides how much to invest in marketing and sales
• Growth Strategy: Reveals which channels and campaigns deliver the best ROI
• Investor Metrics: A key metric investors look at when evaluating your business

How to Calculate CAC

The basic CAC formula is simple:

Customer Acquisition Cost = Total Marketing & Sales Spend / Number of New Customers

Where:

• Total Marketing & Sales Spend: All costs related to acquiring customers (advertising, salaries, tools, agencies, etc.)
• Number of New Customers: The total new customers acquired during the same time period

Using Our CAC Calculator

1. Enter your total marketing and sales spend for a specific period (month, quarter, or year)
2. Enter the number of new customers you acquired during that same period

The calculator will instantly show your average Customer Acquisition Cost.

What’s a Good CAC?

A “good” CAC varies by industry and business model, but here are some general guidelines:

• SaaS businesses: CAC should be recovered within 12 months
• E-commerce: CAC should be 25-30% of customer lifetime value
• Compare to LTV: Your customer lifetime value (LTV) should be at least 3x your CAC

Remember, the goal isn’t just to lower CAC, but to find the right balance between acquisition cost and customer value. Use this free customer acquisition cost calculator to track your CAC over time and optimize your marketing spend.