CAC (Customer Acquisition Cost)
Customer Acquisition Cost (CAC) is the total cost of acquiring one new paying customer, including all marketing and sales spend.
Formula
In depth
CAC is calculated over a specific period. If you spent $10,000 on marketing and sales in a month and acquired 100 new customers, your CAC is $100.
Full-loaded CAC vs. Blended CAC: - Blended CAC includes all new customers regardless of channel - Paid CAC includes only customers from paid channels (ads) - Organic CAC is customers from SEO, word-of-mouth, and content (often $0 in paid spend)
CAC Payback Period: how many months of revenue to recover the CAC. Target < 12 months for B2C SaaS, < 18 months for B2B SaaS.
LTV:CAC ratio: the most important benchmark. Below 3× means you're spending too much to acquire customers. Above 5× means you might be under-investing in growth.
Real example
If you spend $5,000/month on ads and sales and acquire 50 customers: CAC = $100. If ARPU is $50/month at 70% margin, payback = $100 ÷ ($50 × 0.7) = 2.9 months.
Tools & calculators
Related terms
MRR (Monthly Recurring Revenue)
Monthly Recurring Revenue (MRR) is the predictable, normalized monthly revenue generated from all active subscriptions. It's the north star metric for SaaS companies.
LTV (Lifetime Value)
Customer Lifetime Value (LTV or CLV) is the total predicted revenue you'll earn from a customer over the entire duration of your relationship.
Churn Rate
Churn rate is the percentage of customers (or revenue) that cancels or doesn't renew in a given time period. It's the single most important retention metric for subscription businesses.
ARPU (Average Revenue Per User)
Average Revenue Per User (ARPU) is the average monthly revenue generated per paying customer. It's the building block for LTV, MRR projections, and pricing decisions.
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