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Unit economics

Customer acquisition cost (CAC)

Also known as Cost per acquisition

Customer acquisition cost is the total sales and marketing spend required to win one new customer over a period.

Updated July 2026·Sources: David Skok, For Entrepreneurs (SaaS Metrics 2.0)

Key takeaways

  1. CAC = Total Sales & Marketing Spend ÷ New Customers Acquired
  2. Blended CAC varies widely by channel and motion
  3. CAC tells you what growth actually costs.

What is customer acquisition cost (cac)?

Customer acquisition cost is the total sales and marketing spend required to win one new customer over a period. You calculate it by dividing all acquisition costs (ad spend, salaries, tools, commissions) by the number of new customers gained. CAC is the denominator behind LTV:CAC and payback period, the two metrics investors scrutinize most.

Formula

Formula

CAC = Total Sales & Marketing Spend ÷ New Customers Acquired

  • Total Sales & Marketing SpendAll acquisition costs in the period: ad spend, salaries, commissions, and tools
  • New Customers AcquiredCount of paying customers won in that same period

Worked example

A startup spends $60,000 on sales and marketing in a quarter and signs 40 new customers. Its CAC is $1,500 per customer, every new logo costs $1,500 to acquire before any revenue is collected.

Benchmarks by stage

There is no universal 'good' CAC; it is only meaningful against LTV and payback. Aim for LTV at least 3x CAC and payback under 12 months.

Source: David Skok, For Entrepreneurs (SaaS Metrics 2.0) (2023)

Why it matters for fast-growing companies

CAC tells you what growth actually costs. Rising CAC with flat LTV is the fastest way to burn a funding round, so investors track it before writing the next check.

Frequently asked questions

What costs go into CAC?+
Include every acquisition cost in the period: paid ad spend, sales and marketing salaries, sales commissions, agency fees, and software tools. Exclude customer success and retention costs, which serve existing customers rather than acquiring new ones. Fully loaded CAC gives the truest picture.
What's the difference between blended and paid CAC?+
Blended CAC divides total spend by all new customers, including organic and referral. Paid CAC counts only customers from paid channels against paid spend. Blended looks flattering; paid CAC reveals what scaling acquisition truly costs, so investors usually ask for both.

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