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 to 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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