Metrics

What Is CAC (Customer Acquisition Cost) (Customer Acquisition Cost)?

Q: CAC vs CPA — what's the difference?

CPA is per-platform, per-action, ad spend only. CAC is company-wide, per-customer, fully-loaded. CAC is always higher than CPA — sometimes by 2×.

Q: How do I lower CAC?

Improve conversion rate, raise AOV, expand LTV via retention. Ad-side optimisation lowers CPA but rarely moves fully-loaded CAC by more than 15%.

Customer Acquisition Cost (CAC) is the total marketing + sales spend divided by the number of new customers acquired in the same period. Unlike CPA (platform-reported per-action cost), CAC is the fully-loaded company-level number your CFO and board use to decide funding decisions.

Formula

CAC = (Marketing Spend + Sales Spend) ÷ New Customers Acquired

Worked example

In a quarter you spend $120K on ads, $30K on agency fees, $15K on tools, $75K on SDR salaries — $240K total. You add 400 new customers. CAC = 240,000 ÷ 400 = $600. Compare that to LTV — if it's $2,400, LTV:CAC = 4 and you can scale. If LTV is $1,000, it's 1.7 and you have a payback problem.

Benchmarks

SaaS: healthy LTV:CAC ratio 3:1 or better.
DTC: contribution margin per first order should recover 40–70% of CAC.
Payback period: < 12 months for VC-scale; < 6 months for bootstrapped.

Why it matters

CAC is the honest scale metric. Platform-reported CPA can drop while CAC creeps up — because CAC includes agency, tools, and sales. Only CAC tells you whether growth is profitable at the company level.

Common mistakes

1.Confusing CAC and CPA. CPA is per platform; CAC is company-level fully loaded.
2.Not including sales spend. In B2B, sales often dwarfs marketing — excluding it halves CAC on paper.
3.Blended CAC only. Segment by channel + cohort for real insight.