Customer Acquisition Cost (CAC) is the total cost a business incurs to acquire a new paying customer. It is a critical metric for evaluating the efficiency of marketing and sales efforts, and for determining business sustainability when compared to Customer Lifetime Value (CLV).
CAC = Total Sales & Marketing Costs / Number of New Customers Acquired
Total Sales & Marketing Costs = all expenses related to acquiring customers (advertising, salaries, tools, events) over a given period. Number of New Customers Acquired = customers gained in that same period.
Example 1: Q1 marketing spend: $50,000 in ads + $30,000 in sales salaries = $80,000 total. 400 new customers acquired.
Result: CAC = $200 per customer
Example 2: SaaS company: Annual marketing $240K, sales team $360K, tools $60K = $660K total. Acquired 1,100 customers.
Result: CAC = $600 — evaluate against LTV (healthy LTV:CAC ratio is 3:1 or better)
Use our free CAC Calculator to skip the manual math.
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