Customer acquisition cost calculator
This free CAC calculator shows exactly how much you spend to acquire each new customer. Enter your marketing spend, sales costs, and customer count to see your acquisition cost, LTV:CAC ratio, and payback period.
Results
Customer acquisition cost
per new customer (monthly)
Total spend
marketing + sales
Cost per $1 revenue
enable LTV to see
Spend breakdown
You're spending $4,000 to acquire each new customer. Enable the LTV:CAC ratio above to see if your acquisition cost is sustainable.
How to calculate customer acquisition cost
The CAC formula
Customer acquisition cost means the total cost of acquiring one new customer. It is a metric that measures how much a company spends on sales and marketing to acquire new customers during a specific period. To calculate the customer acquisition cost, add up every dollar spent on marketing and sales, then divide by the number of new customers acquired. This tells you exactly how much it costs to acquire each customer through your combined acquisition efforts.
Formula
CAC = (Marketing Spend + Sales Spend) ÷ New Customers
Example: ($15,000 + $25,000) ÷ 10 = $4,000 per customer
CAC calculation example
A B2B SaaS company spends $15,000 on marketing (Google Ads, content, SEO tools) and $25,000 on sales (two reps, CRM, commissions) in a month. They acquire 10 new customers. Their simple CAC is $40,000 ÷ 10 = $4,000 per customer. If each customer pays $500 per month and stays for 24 months, customer lifetime value is $12,000 — giving an LTV to CAC ratio of 3:1 and a CAC payback period of 8 months. Use the calculator to determine how much your own business spends to acquire customers and whether your unit economics are healthy.
What costs to include
An accurate CAC calculation requires capturing all acquisition-related costs. The cost of marketing includes advertising spend, content production, SEO tools, agency fees, and total marketing team salaries. The cost of sales includes sales rep salaries, commissions, CRM software, travel, and demo infrastructure. The total marketing and sales expenses divided by new customers gives you the average cost to acquire a customer. The more complete your inputs, the more useful the metric becomes.
Cost breakdown
LTV:CAC ratio
The LTV:CAC ratio compares how much a customer is worth over their lifetime to how much it cost to acquire them. Multiply average monthly revenue per customer by average customer lifetime in months to get customer lifetime value (LTV). Then divide LTV by CAC. When LTV is higher than CAC, every new customer generates profit. A ratio of 3:1 is the widely accepted benchmark for healthy SaaS unit economics. LTV and CAC together are the most important metrics for measuring whether your growth is sustainable.
Formula
LTV:CAC = (Monthly Revenue × Lifetime Months) ÷ CAC
Example: ($500/mo × 24 months) ÷ $4,000 = 3:1 ratio
CAC payback period
CAC payback tells you how many months it takes to recover the cost of acquiring a customer through their revenue. Divide CAC by monthly revenue per customer. If your CAC is too high relative to monthly revenue, the payback period stretches beyond what most businesses can sustain. Most venture-backed SaaS companies target payback under 18 months. Capital-efficient startups aim for under 12.
Formula
Payback = CAC ÷ Monthly Revenue per Customer
Example: $4,000 ÷ $500/mo = 8 months
What is a good customer acquisition cost
There is no universal benchmark for a good CAC because it depends on your business model, average contract value, and the value of a customer over their lifetime. A $5,000 CAC is excellent if your average customer pays $50,000 per year. The same $5,000 client acquisition cost is unsustainable if your average deal is $2,000. Measure your customer acquisition cost against companies with a similar product or service to get a meaningful comparison.
SaaS companies typically evaluate CAC through the LTV:CAC ratio. A ratio of 3:1 means every dollar spent on customer acquisition generates three dollars in lifetime revenue. Below 1:1, the company loses money on every new customer. Between 1:1 and 3:1, the economics work but leave little margin for error. Above 5:1, the company may be underinvesting in growth and leaving revenue on the table.
The CAC payback period adds a time dimension. Even with a strong LTV:CAC ratio, a 36-month payback period ties up cash that could fund growth. The best B2B SaaS companies recover their acquisition cost within 12 months while maintaining a 3:1+ LTV:CAC ratio. This combination of fast payback and high lifetime value is what separates capital-efficient companies from those that burn through funding.
CAC benchmarks by industry
CAC varies by industry and business model because each sector has different sales cycles, conversion rates, and customer retention rates. A SaaS company selling a $50/month product needs a fundamentally different cost to acquire each new customer than an enterprise software company closing six-figure deals. Compare your CAC against companies with a similar average cost per deal, not against industry-wide averages that blend every business model together.
Typical CAC ranges
These ranges reflect blended CAC — the average cost of acquiring new customers across all channels including organic, paid, and referral. Paid CAC from channels like Google Ads or LinkedIn Ads runs 2–5x higher than blended CAC because it excludes the free organic traffic that lowers the overall average. Higher CAC is acceptable when customer lifetime value (CLV) supports it. A $5,000 acquisition cost works when each customer generates $25,000 in lifetime revenue. Use the CAC calculator above to determine how much your business spends to acquire a customer and whether that cost is sustainable given your product or service margins.
Strategies to reduce customer acquisition costs
Reducing customer acquisition costs starts with measuring where money goes and which acquisition efforts produce results. Track CAC by channel to identify which marketing and sales efforts deliver the lowest cost to acquire a new customer. Many companies discover that 80% of their new customers come from 20% of their acquisition spending.
Improve conversion rates
The fastest way to lower CAC without increasing budget is improving your conversion rate at each stage of the sales process. Better landing pages, faster sales follow-up, stronger qualification criteria, and clearer pricing all reduce the number of touches needed to acquire customers. A 20% improvement in conversion rate directly lowers your cost to acquire each customer by 20%.
Invest in organic channels
Content marketing, SEO, and referral programs compound over time and drive down blended CAC. While paid channels like Google Ads deliver immediate results, the cost of acquiring customers through paid spend stays constant or increases. Organic channels have a high upfront cost of marketing and content production but the cost per new customer acquired decreases as the content ranks and attracts traffic without additional spend.
Optimize the sales process
Shortening your sales cycle reduces the cost of sales per deal. Target accounts showing active buying signals instead of cold outreach to unqualified prospects. Use customer acquisition strategies that focus sales reps on high-intent accounts where the cost associated with closing is lower. When reps spend less time on accounts that never convert, the total cost to acquire new customers drops.
Improve customer retention
Reducing churn rate has a multiplier effect on CAC efficiency. Every customer you retain is one fewer new customer you need to acquire to maintain revenue. Strong customer retention rates also improve LTV, which means you can spend more to acquire each customer while keeping LTV to CAC ratios healthy. Improving retention by 5% can reduce the total number of new customers you need to acquire by 25–30%.
Use this CAC calculator to determine your current acquisition cost, then model how each strategy affects your metrics. Compare CAC across channels to see where you are spending to acquire customers most efficiently. Even small improvements in marketing efficiency, conversion rate, or customer retention compound into meaningful CAC reductions over time. The goal is not just to lower CAC in isolation but to balance CAC against customer lifetime value so that every dollar spent acquiring new customers generates a positive return on investment.
CAC calculator FAQ
How do you calculate customer acquisition cost?
Divide your total sales and marketing spend by the number of new customers acquired in the same period. If you spent $40,000 on marketing and sales in a month and acquired 10 new customers, your CAC is $4,000. Include all costs: ad spend, salaries, tools, content production, and sales commissions.
What is a good CAC for SaaS?
A good CAC depends on your average contract value (ACV). Most SaaS companies target a LTV:CAC ratio of 3:1 or higher — meaning each customer generates 3x their acquisition cost in lifetime revenue. For B2B SaaS with $10,000+ ACV, CAC between $2,000 and $5,000 is common. For SMB SaaS with lower ACV, CAC needs to stay below $500.
What is the LTV:CAC ratio?
LTV:CAC compares customer lifetime value to acquisition cost. A ratio of 3:1 means each customer generates $3 for every $1 spent acquiring them. Below 1:1, you lose money on every customer. Between 1:1 and 3:1, the business is viable but not efficient. Above 5:1 may indicate underinvestment in growth — you could spend more on acquisition and still maintain healthy unit economics.
What costs should be included in CAC?
Include all marketing costs (ad spend, content production, SEO tools, marketing salaries, agency fees) and all sales costs (sales team salaries, commissions, CRM tools, travel, demos). Exclude customer success and support costs — those belong in retention metrics, not acquisition. The more complete your cost inputs, the more accurate your CAC calculation.
How do you reduce customer acquisition cost?
Focus on channels with the lowest cost per lead. Improve conversion rates at each funnel stage — better landing pages, faster follow-up, stronger qualification. Invest in organic channels (SEO, content, referrals) that compound over time. Shorten your sales cycle by targeting accounts with active buying signals. A 20% improvement in conversion rate reduces CAC by 20% without spending more.
What is CAC payback period?
CAC payback period is how many months it takes to recover the cost of acquiring a customer through their revenue. If CAC is $6,000 and monthly revenue per customer is $500, payback is 12 months. Most venture-backed SaaS companies target payback under 18 months. Capital-efficient companies aim for under 12 months.
What is blended CAC vs paid CAC?
Blended CAC includes all acquisition costs across every channel — organic, paid, referral, and direct. Paid CAC only counts the cost of acquiring customers through paid channels like Google Ads, LinkedIn Ads, or sponsored content. Blended CAC is typically lower because it includes customers acquired organically at near-zero cost. Investors and boards usually want to see both metrics to understand how dependent growth is on paid spend.
How does CAC vary by industry?
CAC varies widely by industry and business model. B2B SaaS companies typically spend $200 to $2,000 to acquire a new customer depending on deal size. E-commerce businesses average $50 to $100 per customer. Financial services and insurance see higher CAC of $300 to $1,000 because of longer sales cycles. The key metric is not CAC alone but how it compares to customer lifetime value in your specific industry.
What is the difference between CAC and CPA?
Customer acquisition cost (CAC) measures the total cost to acquire a paying customer, including all sales and marketing expenses. Cost per acquisition (CPA) typically measures the cost of a specific conversion action like a sign-up, download, or lead. CAC is a broader business metric while CPA is a campaign-level metric. A single customer might have a CPA of $50 for the initial lead but a CAC of $500 when you include the full sales process.
Lower your CAC
Stop spending on accounts that aren't ready to buy
Signado shows you which target accounts just raised funding, hired new leadership, or launched a product — the buying signals that mean they're ready to convert.
Start Free