Glossary · Metrics · Updated
Customer acquisition cost (CAC) is the average amount spent to win one new paying customer. It is total sales and marketing spend for a period divided by the number of customers acquired in that same period.
The hard part of CAC is not the division, it is the numerator. Many founders count only the advertising budget, which produces a flattering but wrong number. A credible CAC includes fully loaded sales and marketing salaries, tools, commissions and the cost of producing content.
CAC alone says nothing. It only becomes meaningful against the gross margin a customer generates, either as a payback period or as a ratio with LTV. A €3,000 CAC is excellent on a €500 per month contract and catastrophic on a €20 subscription.
It also needs segmenting. Average CAC almost always hides large differences between channels and segments: organic search can cost ten times less than paid advertising, and a customer matching your ideal profile can cost a third of an off-target one.
Example: a full CAC calculation
A B2B SaaS measures acquisition cost across one full quarter.
| Marketing spend (ads, content, events) | €45,000 |
|---|---|
| Fully loaded sales and marketing salaries | €75,000 |
| Total acquisition spend | €120,000 |
| New customers signed in the quarter | 40 |
| CAC | €120,000 / 40 = €3,000 |
| Average monthly revenue per customer | €500 |
| Gross margin | 80%, or €400/month |
| CAC payback period | €3,000 / €400 = 7.5 months |
Counting only the marketing budget, the same company would report a €1,125 CAC. That is the number founders quote first, and the first one an investor recalculates.
The common mistake
Leaving salaries out. In any model with salespeople, payroll is often two thirds of the real acquisition cost. A CAC that ignores it is not measuring acquisition cost, it is measuring the ad budget.
Frequently asked questions
How do you calculate CAC?+
CAC = total sales and marketing spend for a period divided by new customers acquired in that period. The total must include fully loaded salaries for those teams, tools, commissions and content production, not just media spend.
What is a good CAC payback period?+
In B2B SaaS, under twelve months is generally considered healthy and around six months is very good. Beyond eighteen months, growth becomes highly cash-consuming, because each new customer deepens the funding gap before closing it.
Related terms
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