Customer Acquisition Cost (CAC) is the total cost of sales and marketing required to acquire one new paying customer in a given period. It is calculated by dividing total sales and marketing spend by the number of new customers acquired. CAC is a core unit economics metric used alongside LTV and payback period to evaluate business model health.
CAC shows how efficiently spend becomes new customers. Use with payback period and LTV.
Be consistent on definition, and know variants investors may ask about.
At minimum: media spend and attributable variable costs.
Fully loaded: add sales and marketing salaries, software, contractors, and creative tied to acquisition.
SMB: paid CAC ~$300–$1k; Mid-market: $1k–$4k; Enterprise: $5k–$20k (varies).
Target gross-margin payback: SMB < 12–15 mo; Mid 12–18; Ent 18–24.
Q2 S&M = $120k; New customers = 240 → Blended CAC = $500.
Paid media = $90k; Paid customers = 180 → Paid CAC = $500.
Mixing paid vs blended CAC; inconsistent time windows; counting trials instead of paid.
Excluding discounts/credits or referral fees; not separating enterprise pilots.
Financials/Traction slide: 'Blended CAC $500; GM payback 12.5 mo; LTV/CAC 3.8x'.
CAC $500; GM payback 12.5 mo; LTV/CAC 3.8x.
Includes all channels and costs. Smooths channel noise; useful for board-level tracking.
Use for paid channel efficiency. Excludes salaries and organic demand.
Common investor ask. Be explicit about inclusions.
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