Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) represents the total cost of acquiring a new customer, including all marketing expenses, sales team costs, and related overhead.

How to Calculate CAC

The basic CAC formula is:

CAC = Total Acquisition Costs / Number of New Customers Acquired

For example, if you spent $10,000 on marketing and sales in a month and acquired 100 new customers, your CAC would be $100.

What to Include in CAC

Marketing Costs: Advertising, content creation, marketing tools

Sales Costs: Salaries, commissions, sales software

Overhead: Portion of office space, utilities, management time

Technology: CRM, marketing automation, analytics tools

CAC by Channel

It’s important to calculate CAC for different acquisition channels:

Paid Advertising: Google Ads, Facebook Ads, LinkedIn

Content Marketing: Blog, SEO, social media

Email Marketing: Campaigns, automation sequences

Referrals: Referral program costs

Direct Sales: Inside sales, field sales teams

CAC Optimization Strategies

1. Improve Conversion Rates: Optimize landing pages and sales funnels
2. Target Better Audiences: Focus on high-intent prospects
3. Automate Processes: Reduce manual sales and marketing work
4. Improve Retention: Higher LTV justifies higher CAC
5. Optimize Channels: Focus budget on most efficient channels

CAC Benchmarks

B2B SaaS: $200-$400 for SMB, $1,000+ for enterprise

B2C SaaS: $20-$200 depending on price point

E-commerce: $10-$50 for most categories

The key is ensuring your CAC is significantly lower than your Customer Lifetime Value (LTV).