What is customer acquisition cost (CAC)?
Customer acquisition cost is the total amount you spend on sales and marketing to win one new customer. It is the denominator in every efficiency metric that matters for B2B SaaS: LTV:CAC and CAC payback both start here. A fully-loaded CAC includes ad spend, salaries, tools and agency fees, not just media cost.
How this calculator works
The formula: CAC = Sales & marketing spend ÷ new customers Monthly gross profit = ARPA × gross margin CAC payback (months) = CAC ÷ monthly gross profit
CAC on its own does not tell you if you are efficient. A $5,000 CAC is excellent at a $50K ACV and dangerous at a $3K ACV. Always read it against payback period and LTV.
What is a good CAC payback period?
| Payback | Read | What it means |
|---|---|---|
| Under 6 months | Excellent | Highly capital-efficient; you can reinvest fast. |
| 6 to 12 months | Good | Healthy for most B2B SaaS. |
| 12 to 18 months | Watch | Workable with strong retention, risky without. |
| Over 18 months | Too slow | Growth is burning cash faster than it returns. |
How to reduce CAC
- Shift toward compounding channels. SEO and content lower blended CAC over time because they keep converting after publication.
- Improve funnel conversion. Better landing pages and qualification close more customers from the same spend.
- Tighten ICP targeting. Fewer wasted clicks and demos on poor-fit accounts.
- Raise close rates. Sales enablement and faster follow-up lift the customer count in the denominator.
Frequently asked questions
How do you calculate CAC for SaaS?
CAC = total sales and marketing spend in a period ÷ new customers acquired in that period. Include ad spend, salaries, tools and agency fees for a fully-loaded figure. $40,000 of spend producing 20 customers gives a $2,000 CAC.
What is CAC payback period?
How many months of gross profit it takes to recover a customer's acquisition cost: CAC ÷ (ARPA × gross margin). Under 12 months is good for B2B SaaS; under 6 is excellent.
What is a good CAC for B2B SaaS?
There is no universal number because CAC scales with deal size. Judge it by LTV:CAC (about 3:1 healthy) and payback period (under 12 months). A $10,000 CAC can be excellent at high ACV and terrible at low ACV.
How can I reduce CAC?
Shift spend toward compounding channels like SEO, improve funnel conversion, tighten ICP targeting, and raise close rates. Organic search usually has the lowest long-run CAC because content keeps converting after it is published.