Customer Acquisition Cost (CAC)
The total cost of acquiring a new customer, including all sales and marketing expenses divided by the number of new customers acquired.
What is Customer Acquisition Cost (CAC)?
CAC measures how much it costs to win a new customer. It includes all sales and marketing expenses — advertising spend, sales team salaries, marketing tools, content production, events — divided by the number of new customers acquired in that period.
A fully-loaded CAC includes everything related to acquisition, not just the direct ad spend. If your sales team of three people (total cost $30,000/month) and marketing spend ($10,000/month) acquires 20 customers per month, your CAC = $40,000 / 20 = $2,000.
CAC varies dramatically by business model and go-to-market strategy. Self-serve SaaS products might have a CAC of $50-$500, while enterprise sales can have a CAC of $5,000-$50,000+.
Why it matters
CAC determines whether your growth is sustainable. If it costs $3,000 to acquire a customer who only generates $2,000 in lifetime value, every new customer is a net loss. You'd be better off not acquiring them.
CAC also affects runway directly. The more you spend on customer acquisition, the higher your burn rate. Understanding CAC helps you calibrate how aggressively to invest in growth while maintaining sufficient runway.
Formula
CAC = Total Sales & Marketing Expenses / Number of New Customers Acquired
Example
In March: paid advertising $8,000, marketing team salaries $12,000, sales team salaries $20,000, sales tools $2,000. Total S&M = $42,000. New customers acquired: 14. CAC = $42,000 / 14 = $3,000 per customer.
Common mistakes
- 1Calculating CAC using only ad spend while ignoring sales team salaries and overhead
- 2Not separating CAC by channel (your Google Ads CAC might be $500 while your enterprise sales CAC is $10,000)
- 3Measuring CAC over too short a period, which can be misleading due to sales cycle length
See how acquisition costs impact your runway
RunwayCal connects your spending to your runway calculation, so you can see the runway impact of different growth investment levels.
Track spending impact → Start free