Customer Acquisition Cost (CAC) is the total amount your business spends to acquire one new customer. It includes all sales and marketing expenses—from advertising spend and sales salaries to software tools and trade shows—divided by the number of new customers gained during a specific period.
Why CAC Matters in B2B SaaS
CAC serves as the foundation for SaaS profitability and growth strategy. With 81% of SaaS companies tracking CAC as a core metric[1], this measurement directly determines whether your revenue model is sustainable.
Who Uses CAC
Revenue Leadership: CFOs and CROs leverage CAC for strategic budgeting, growth forecasting, and investor reporting. Marketing Teams: Use CAC to optimize channel mix, evaluate campaign performance, and demonstrate marketing ROI. Sales Organizations: Apply CAC insights to refine lead qualification processes and territory planning. RevOps Teams: Integrate CAC into revenue engine optimization and funnel analytics.
How CAC Drives Growth
CAC enables predictable revenue scaling by connecting acquisition spend directly to customer outcomes. Organizations with efficient CAC can reinvest savings into accelerated growth initiatives or outspend competitors strategically. The metric bridges marketing strategy and financial operations, creating accountability across GTM teams while informing critical decisions about pricing, market expansion, and resource allocation.
Core Components
Total Acquisition Costs: Include comprehensive sales and marketing expenses—salaries, advertising spend, content production, events, software tools, and agency fees. Customer Count: Track new customers acquired during the same measurement period, typically monthly or quarterly. Attribution Model: Implement first-touch, last-touch, or multi-touch attribution to accurately assign costs to customer acquisition activities.
How CAC Works
Cost Aggregation: Collect all acquisition-related expenses from marketing campaigns, sales operations, and supporting systems during your measurement period. Customer Tracking: Integrate CRM data to capture accurate new customer counts with proper source attribution. Calculation Process: Apply the formula: Total Sales & Marketing Costs ÷ Number of New Customers Acquired. Analysis & Optimization: Segment CAC by channel, persona, or campaign to identify high-performing acquisition strategies and eliminate inefficient spend.
Key Benefits
- Strategic Resource Allocation: Optimize budget distribution across channels based on acquisition efficiency rather than intuition
- Predictable Growth Planning: Forecast customer acquisition capacity and cash requirements for scaling initiatives
- Channel Performance: Identify which acquisition channels deliver sustainable, cost-effective growth
- Investor Confidence: Demonstrate financial discipline with disciplined unit economics that support funding decisions
- Competitive Advantage: Companies maintaining LTV:CAC ratios above 3.5:1 consistently outperform market benchmarks[2]
Sources
1. OpenView Partners, 2023
2. SaaStr, 2024