CAC

TL;DR

Customer Acquisition Cost — the total sales and marketing spend required to acquire one new paying customer over a given period.

CAC divides total customer-acquisition cost (sales + marketing spend, fully loaded) by the number of new customers acquired in the same period. Blended CAC mixes paid and organic; paid CAC isolates only customers acquired through paid channels.

Good CAC discipline requires consistent attribution, full loading of cost (including S&M salaries, tools, content), and segmentation by channel. CAC by channel often varies 5–10× — a blended CAC hides whether one channel is carrying the company.

Formula

CAC = (Sales + Marketing Spend in Period) ÷ New Customers Acquired in Same Period

• Sales + Marketing Spend — Fully loaded sales and marketing expense (people, programs, tools, allocated overhead) in the period
• New Customers Acquired — Net-new paying customers won in the same period

Use blended CAC for company benchmarks, paid CAC for channel-level decisions. Avoid mixing the two.

Worked example

Q3 S&M spend $480k, new customers acquired 320 → CAC $1,500. With ACV $4,800 and gross margin 75%, gross-profit-payback = $1,500 ÷ ($4,800 × 75%) ≈ 5 months — healthy SaaS economics.

Common pitfalls

• Excluding salaries and overhead from CAC calculations.
• Comparing blended CAC across periods with different organic mix.
• Optimizing aggregate CAC instead of fixing the worst-channel CAC.

When this shows up in a pitch deck

CAC appears on the Unit Economics slide alongside payback period and LTV:CAC ratio.

See CAC in context

CAC shows up most often in these scoring rubrics and investor profiles — jump straight to who cares about it and how to pitch them.

In VC frameworks

• 500 Global — pitch deck framework

Related terms

• LTV — Lifetime Value — the total margin a customer is expected to generate over their entire relationship with the company.
• CAC Payback Period — The number of months required for the gross profit from a customer to repay the cost of acquiring them.
• LTV:CAC Ratio — The ratio of customer lifetime value to customer acquisition cost — a headline measure of unit economics health.
• Acquisition Channel — A repeatable source of new users or customers, such as paid search, content SEO, partnerships, outbound sales, or virality.
• Magic Number — A SaaS sales-efficiency ratio: net new ARR divided by sales and marketing spend in the prior period.

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