Enter your marketing and sales spend and the number of new customers acquired to find your CAC, then compare it to lifetime value.
Customer acquisition cost (CAC) is the total cost of winning a new customer. It is one of the most important metrics in any business that spends money to grow, because it tells you whether your marketing and sales engine is creating value or burning cash.
CAC is (Total Marketing Spend + Total Sales Spend) ÷ New Customers Acquired over the same period. If you spent $10,000 on marketing and $5,000 on sales to win 50 customers, your CAC is $15,000 / 50 = $300 per customer. Include ad spend, salaries, software, and agency fees for an honest number.
CAC only matters in relation to how much a customer is worth. The LTV:CAC ratio compares lifetime value to acquisition cost. A widely cited benchmark is 3:1 — for every dollar spent acquiring a customer, you earn three back over their lifetime. Below 1:1 you lose money on every customer; above 5:1 you may be underinvesting in growth.
Tip: Track CAC by channel. A blended CAC can hide the fact that one channel is wildly profitable while another loses money. Reallocating spend toward efficient channels is often the fastest way to lower your overall CAC.
Beyond the ratio, watch how long it takes to recover CAC from a customer's revenue. A short payback period (under 12 months for many SaaS businesses) means you can reinvest faster and need less working capital to grow. Long payback periods strain cash flow even when the long-term LTV:CAC looks healthy.