CAC (Customer Acquisition Cost)
Also called: Customer Acquisition Cost, CAC, Cost to Acquire
Definition
The total cost of acquiring a single new customer — including all sales and marketing expenses — divided by the number of customers acquired in a period.
Customer Acquisition Cost (CAC) is the total investment required to win one new customer. It includes all sales and marketing costs — salaries, tools, agency fees, ad spend, events — divided by the number of new customers acquired.
CAC = Total Sales & Marketing Spend ÷ New Customers Acquired
For a company spending $80,000/month on sales (2 AEs, 1 SDR) and marketing ($10K/mo in tools and content) that closes 8 new customers per month, CAC = $90,000 ÷ 8 = $11,250.
Why CAC matters
CAC is the single most important efficiency metric in B2B GTM. It determines whether the business model is sustainable. The rule of thumb: CAC should be recovered within 12–18 months of the customer’s lifetime (CAC payback period). If ACV is $12,000 and CAC is $20,000, the math doesn’t work.
CAC payback period
CAC Payback = CAC ÷ (ACV × Gross Margin)
A business with $20,000 CAC, $30,000 ACV, and 70% gross margin has a payback of: $20,000 ÷ ($30,000 × 0.70) = 0.95 years — just under 12 months. Generally considered healthy.
CAC by channel
Most companies have different CAC by channel (outbound SDR vs inbound SEO vs paid ads) and by segment (SMB vs enterprise). Calculating blended CAC obscures which channels are efficient and which are burning money.
Related concepts
CAC is the complement to LTV (Lifetime Value) in SaaS unit economics. The LTV/CAC ratio — target 3:1 or better — is a core investor and operational health metric.
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