Customer Acquisition Cost, or CAC, is one of those SaaS numbers you just can’t ignore. Basically, it shows you how much you’re shelling out to land a single paying customer. Think about everything that goes into marketing and sales—ads, salaries, software tools, content, even the effort to get someone set up and onboarded. Add all that up for a set period, then divide it by the number of new customers you signed up. That’s your CAC.
So, what does CAC really answer? It’s simple: “How much does it cost us to turn someone interested into someone actually paying?”
For SaaS companies, this metric tells you if your growth is actually working or if you’re just burning money. If you’re spending more to get a customer than you ever make from them, you’ve got a problem. Founders keep an eye on CAC. Investors look at it. Even people browsing SaaS platforms use it to figure out if a product’s business model has legs. Low CAC plus customers who stick around? That’s usually a good sign you’re on the right track.
But you need to look at CAC alongside other numbers, like Customer Lifetime Value (CLTV), ARR, and churn rate. If your CAC is high and people bail quickly, profit gets tricky. On the flip side, a smart, dialed-in CAC means your marketing is working, your sales team’s effective, and people actually want what you’re selling.
In the real world, CAC helps teams figure out where to spend their next marketing dollar. Maybe you find out that paid ads cost way more per customer than, say, organic blogs or customer referrals. Now you know where to double down and where to pull back.
Here’s the quick CAC formula:
CAC = Total Sales & Marketing Costs ÷ Number of New Customers
Let’s say a SaaS CRM company drops $50,000 in a month on ads, sales team salaries, and tools, and they bring in 250 new paying customers. That’s $50,000 divided by 250, so CAC comes out to $200.
In this case, the company spends $200 to bring in each customer. If each customer ends up spending $1,200 before they leave, that’s a pretty healthy CAC.