CAC
Customer Acquisition Cost
Also known as: Customer Acquisition Cost · Cost of Acquisition
The fully-loaded cost of acquiring one paying customer, including sales + marketing + tooling.
In depth
CAC includes every dollar spent to win a customer: ad spend, content, events, SDR salaries, CRM cost, commission, sales engineering. Divide that by customers won in the same period to get CAC.
CAC without context means nothing. Pair it with LTV (is this customer worth more than they cost?) and Payback Period (how long until CAC is recovered?).
Formula & example
Rules of thumb
- Healthy LTV/CAC ratio is 3:1 or higher.
- CAC payback under 12 months = strong; over 24 months = fix something.
- Blended CAC lies. Break it out by channel.
Common mistakes
- Forgetting to include headcount costs (sales + marketing salaries + benefits).
- Using revenue as the denominator instead of customer count.
- Blending self-serve and sales-assisted CAC.
Put it into practice
FAQ
Does CAC include free-tier users?
No — CAC is cost per paying customer. Free users feed the funnel; count acquisition cost only when they convert.
What's a good CAC for a $49/mo SaaS?
Aim for payback under 6 months for self-serve at that price — so CAC < $300 once you account for churn and gross margin.
Related terms
Sources
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Last reviewed 14 April 2026 by Abhi Verma.