What Is Customer Acquisition Cost (CAC)?
Customer acquisition cost (CAC) is the average cost to acquire one new customer over a period — total sales and marketing spend divided by the number of new customers won. It's the denominator of SaaS efficiency, paired with LTV and payback to judge whether growth is actually profitable.
Key takeaways
- CAC = total sales & marketing spend ÷ new customers acquired (same period).
- Include salaries, ad spend, tools and overhead — not just media cost.
- CAC is only meaningful next to LTV:CAC and CAC payback period.
How to calculate CAC
The mistake most teams make is counting only ad spend. A defensible CAC includes the fully-loaded cost of acquisition: rep and marketer salaries, commissions, software, agencies and allocated overhead.
CAC = Total Sales & Marketing Spend ÷ New Customers Acquired
Measure both numerator and denominator over the same period.
Blended vs paid CAC
| Metric | Numerator | Use it to |
|---|---|---|
| Blended CAC | All S&M spend ÷ all new customers | See overall efficiency |
| Paid CAC | Paid spend ÷ customers from paid | Judge paid channels in isolation |
Worked example
If you spend €120,000 on sales and marketing in a quarter and close 40 new customers, CAC is €3,000. Whether that's good depends entirely on lifetime value: at €12,000 LTV your LTV:CAC is a healthy 4:1.
Frequently asked questions
What's a good CAC?
There's no universal number — CAC is only meaningful relative to LTV. A common benchmark is an LTV:CAC ratio of at least 3:1 and a CAC payback period under 12 months.
What's the difference between blended and paid CAC?
Blended CAC divides all acquisition spend by all new customers (including organic). Paid CAC isolates paid channels. Blended flatters efficiency; paid is better for evaluating ad spend.
Is CAC the same as CPA?
Not quite. CPA (cost per acquisition) often refers to a conversion like a lead or signup, while CAC specifically means the cost to win a paying customer.
Related service: Track CAC end-to-end in HubSpot