CAC Calculator
Calculate Customer Acquisition Cost (CAC), LTV:CAC ratio, and CAC payback period.
LTV Calculation (for LTV:CAC Ratio)
Customer Acquisition Cost (CAC)
$400
Highly efficient - may be underinvesting in growth
Your excellent LTV:CAC ratio of 21.0:1 means you could potentially invest more aggressively in growth while maintaining profitability.
CAC Payback Timeline
Excellent payback period. You recover your CAC within a year.
Industry CAC Benchmarks
LTV:CAC Ratio Benchmarks
CAC Optimization Success Story
Dropbox famously reduced their CAC from $400 to under $1 through their referral program that offered free storage space to both the referrer and referee. This demonstrates how creative acquisition strategies can dramatically improve unit economics.
Consider implementing referral programs, improving organic channels, or optimizing ad targeting to reduce your CAC while maintaining quality.
CAC = (Total Marketing Spend + Total Sales Costs) / Number of New Customers
Key Metrics to Monitor:
- LTV:CAC Ratio - Aim for 3:1 or higher for sustainable growth
- CAC Payback Period - Ideal is under 12 months
- CAC by Channel - Double down on efficient channels
- Blended vs Channel CAC - Track both for complete picture
Ways to Reduce CAC:
- Invest in organic channels (SEO, content marketing)
- Build referral programs that incentivize word-of-mouth
- Improve conversion rates on your website
- Target higher-intent audiences in paid campaigns
- Automate sales processes where possible
Related Calculators
About This Calculator
The CAC Calculator measures how much your business spends to acquire each new customer. Enter your total marketing and sales costs along with new customers acquired to calculate Customer Acquisition Cost, CAC Payback Period, and LTV:CAC ratio—the metrics that determine whether your growth is sustainable or a path to bankruptcy.
How to Use the CAC Calculator
- 1Enter your total marketing costs for the period (ads, content, tools, agency fees).
- 2Add sales costs (salaries, commissions, sales tools, travel).
- 3Enter the number of new customers acquired in that same period.
- 4View your blended CAC, and optionally break down by channel.
- 5Calculate CAC Payback Period using your average revenue per customer.
- 6Compare your LTV:CAC ratio against benchmarks to assess unit economics.
Formula
CAC = Total Marketing & Sales Costs / New Customers AcquiredCustomer Acquisition Cost represents the total investment required to convert a prospect into a paying customer. This includes all marketing expenses (advertising, content creation, tools, agencies) plus all sales expenses (salaries, commissions, tools, travel) divided by the number of new customers acquired during that period.
The CAC Formula and Calculation
Basic CAC Formula: CAC = (Total Marketing Costs + Total Sales Costs) / New Customers Acquired
Example Calculation:
- Marketing spend: $50,000 (ads, content, tools)
- Sales costs: $30,000 (salaries, commissions)
- New customers: 200
- CAC = $80,000 / 200 = $400 per customer
What to Include in Costs:
| Marketing Costs | Sales Costs |
|---|---|
| Paid advertising | Sales salaries |
| Content creation | Sales commissions |
| Marketing tools | CRM software |
| Agency fees | Sales training |
| Events/sponsorships | Travel expenses |
| Marketing salaries | Sales enablement tools |
Critical Rule: Include ALL costs associated with acquiring customers. Excluding costs gives you a false sense of profitability.
Blended vs. Paid vs. Organic CAC
Blended CAC: All acquisition costs divided by all new customers. This is your overall efficiency metric.
Paid CAC: Only paid marketing costs divided by customers from paid channels.
- More accurate for scaling decisions
- Shows true cost of paid growth
Organic CAC: Costs of organic efforts (SEO, content, social) divided by organic customers.
- Often significantly lower than paid CAC
- Takes longer to build but compounds over time
Example Breakdown:
| Channel | Spend | Customers | CAC |
|---|---|---|---|
| Google Ads | $30,000 | 100 | $300 |
| Facebook Ads | $20,000 | 50 | $400 |
| SEO/Content | $10,000 | 80 | $125 |
| Referrals | $5,000 | 40 | $125 |
| Total | $65,000 | 270 | $241 blended |
Why This Matters: Your blended CAC of $241 looks healthy, but your paid CAC ($333) is 2.7x your organic CAC ($125). Scaling paid channels will push blended CAC higher.
Startup Trap: Reporting blended CAC while planning paid growth projections. VCs will catch this immediately.
CAC Payback Period: The Metric VCs Actually Care About
CAC Payback Period Formula: Payback Period = CAC / (Monthly Revenue per Customer x Gross Margin %)
Example:
- CAC: $400
- Monthly revenue per customer: $100
- Gross margin: 80%
- Payback = $400 / ($100 x 0.80) = 5 months
Industry Benchmarks:
| Business Type | Good Payback | Excellent Payback |
|---|---|---|
| SaaS (SMB) | < 12 months | < 6 months |
| SaaS (Enterprise) | < 18 months | < 12 months |
| E-commerce | < 3 months | < 1 month |
| Subscription boxes | < 4 months | < 2 months |
| Marketplaces | < 6 months | < 3 months |
Why VCs Obsess Over Payback:
- Cash efficiency: Shorter payback = faster reinvestment
- Risk reduction: Customers pay back before potential churn
- Growth potential: Sub-12 month payback enables aggressive scaling
The Math That Matters:
- 6-month payback: You can reinvest customer revenue 2x per year
- 12-month payback: Revenue from January customers funds July acquisition
- 18-month payback: Requires external capital to fund growth
Red Flag: Payback period > customer lifetime = you're losing money on every customer.
LTV:CAC Ratio: The Unit Economics Holy Grail
The Formula: LTV:CAC = Customer Lifetime Value / Customer Acquisition Cost
Benchmark Targets:
| Ratio | Assessment |
|---|---|
| < 1:1 | Losing money on every customer |
| 1:1 to 2:1 | Unsustainable, barely covering costs |
| 3:1 | Healthy, industry standard target |
| 4:1 to 5:1 | Excellent unit economics |
| > 5:1 | May be underinvesting in growth |
Example Calculation:
- LTV: $2,400 (24 months x $100/month)
- CAC: $400
- LTV:CAC = $2,400 / $400 = 6:1
Why 3:1 Is the Magic Number:
- ~33% goes to acquiring customer
- ~33% covers operating costs
- ~33% is profit margin
- Leaves room for CAC increases as you scale
The Nuance:
- Early-stage startups: 2:1 may be acceptable for growth
- Mature companies: Should target 4:1+
- High-churn industries: Need higher ratios to account for shorter LTV
Channel-Level Analysis:
| Channel | CAC | LTV | LTV:CAC |
|---|---|---|---|
| Google Ads | $300 | $2,000 | 6.7:1 |
| $400 | $1,500 | 3.8:1 | |
| Influencer | $600 | $1,200 | 2.0:1 |
| Organic | $125 | $2,800 | 22.4:1 |
Insight: Organic customers often have higher LTV due to higher intent.
Jar Insight: The Cautionary Tales of CAC Disasters
When Ignoring CAC Implodes Billion-Dollar Companies:
WeWork: The $47 Billion Lesson
- Spent $2+ per $1 of revenue on growth
- CAC included free months, lavish buildouts, below-market rents
- True CAC payback: 5+ years (on 3-year average tenancy)
- Result: IPO collapsed, valuation dropped 95%
Uber: The Subsidy Death Spiral
- Early CAC: $300+ per rider (via heavy subsidies)
- Drivers subsidized $6+ per ride
- Lost $3.80 for every active rider monthly
- 2019: Still spending $5.42 for every $10 of revenue on sales/marketing
- Only achieved profitability after dramatically cutting CAC spend
Blue Apron: Growth at Any Cost
- CAC: $94 per customer
- Average customer revenue: $250 over lifetime
- LTV:CAC looked fine (2.7:1)
- Hidden problem: 72% churn rate meant LTV was overstated
- True LTV:CAC: < 1:1
- Stock dropped 99% from IPO high
MoviePass: The Ultimate CAC Catastrophe
- "CAC" was actually negative (charged $10/month, customers used $50+)
- Strategy: "We'll make it up on data and partnerships"
- Burned through $40M per month
- Shutdown within 2 years
The Pattern in Tech Bubble CAC Disasters:
- Metric manipulation: Report blended CAC while scaling paid channels
- LTV fantasy: Assume customers stay forever
- Cohort blindness: Ignore deteriorating newer cohort economics
- Growth pressure: VC pressure to grow overrides unit economics
- Churn denial: Optimistic retention assumptions inflate LTV
The Hard Truth:
"Growth hides all sins, until it doesn't." — Every failed startup post-mortem
Warning Signs:
- CAC increasing faster than LTV
- Payback period extending quarter over quarter
- Newer cohorts churning faster than older ones
- Blended CAC diverging from paid CAC
CAC Benchmarks by Industry
SaaS Benchmarks:
| Segment | Median CAC | Top Quartile |
|---|---|---|
| SMB (< $1K ACV) | $200-$500 | < $150 |
| Mid-Market ($10K-$50K ACV) | $2,000-$5,000 | < $1,500 |
| Enterprise ($100K+ ACV) | $10,000-$30,000 | < $8,000 |
E-commerce Benchmarks:
| Category | Average CAC |
|---|---|
| Fashion/Apparel | $50-$100 |
| Beauty | $50-$150 |
| Home goods | $80-$150 |
| Electronics | $100-$300 |
| Luxury | $200-$500 |
Fintech Benchmarks:
| Product Type | CAC Range |
|---|---|
| Banking app | $30-$100 |
| Investment platform | $100-$350 |
| Insurance | $300-$900 |
| Lending | $150-$500 |
| B2B payments | $500-$2,000 |
D2C/Subscription Benchmarks:
| Category | CAC Range |
|---|---|
| Meal kits | $80-$150 |
| Subscription boxes | $40-$100 |
| Health/wellness | $30-$80 |
| Pet products | $40-$90 |
Key Insight: CAC should typically be 20-30% of first-year customer value. If CAC exceeds 50% of first-year revenue, growth requires external funding.
CAC by Marketing Channel
Paid Channel CAC Benchmarks (2024-2025):
| Channel | B2C CAC | B2B CAC |
|---|---|---|
| Google Search Ads | $50-$150 | $200-$800 |
| Google Display | $30-$80 | $100-$400 |
| Facebook/Instagram | $30-$100 | $150-$600 |
| $100-$300 | $300-$1,500 | |
| TikTok | $20-$60 | $100-$300 |
| YouTube | $40-$120 | $200-$700 |
| Podcast Ads | $50-$200 | $300-$1,000 |
Organic Channel CAC:
| Channel | Investment Period | Typical CAC Once Mature |
|---|---|---|
| SEO/Content | 6-18 months | $20-$100 |
| Referral programs | 3-6 months | $30-$80 |
| Community/Social | 6-12 months | $15-$50 |
| Email (owned list) | Ongoing | $5-$20 |
CAC Trend Alert (2024-2025):
- Meta CPMs up 30% since 2022
- Google CPC up 20-40% in competitive verticals
- TikTok CAC rising as platform matures
- Organic channels becoming more valuable as paid costs rise
Channel Mix Strategy:
| Stage | Paid % | Organic % |
|---|---|---|
| Launch (0-6 months) | 70-80% | 20-30% |
| Growth (6-24 months) | 50-60% | 40-50% |
| Scale (24+ months) | 30-40% | 60-70% |
The best companies systematically reduce paid dependency over time.
2026 CAC Trends and Challenges
The Privacy Apocalypse Impact:
iOS 14+ privacy changes have disrupted CAC measurement and efficiency:
- 30-40% decrease in tracked conversions
- Meta CPMs up 30-50% for same results
- Attribution windows shortened from 28 to 7 days
- Server-side tracking now essential
2026 CAC Benchmarks Update:
| Channel | 2023 CAC | 2026 CAC | Change |
|---|---|---|---|
| Meta (Facebook/IG) | $80 | $110 | +38% |
| Google Ads | $120 | $145 | +21% |
| TikTok | $40 | $65 | +63% |
| LinkedIn (B2B) | $400 | $520 | +30% |
| SEO/Organic | $50 | $55 | +10% |
| $15 | $18 | +20% |
AI Impact on CAC:
- AI ad creative tools reducing production costs 50-70%
- AI targeting/bidding improving efficiency 10-20%
- AI chatbots reducing sales costs for qualification
- However: Everyone has AI, so competitive advantage is temporary
Emerging CAC-Efficient Channels:
- Creator partnerships: 2-4x better CAC than traditional influencer
- Community-led growth: Lowest CAC, highest LTV
- Product-led growth: Users convert themselves
- Referral 2.0: Two-sided incentives, viral loops
Red Flags in 2026:
- Reliance on single paid channel (>50% of acquisition)
- No first-party data strategy
- CAC increasing faster than inflation
- Organic contributing <30% of new customers
Reducing CAC: Proven Strategies
Conversion Rate Optimization (CRO):
Impact of improving conversion at each stage:
| Funnel Stage | Before | After | CAC Impact |
|---|---|---|---|
| Landing page | 3% | 4% | -25% CAC |
| Free trial signup | 40% | 50% | -20% CAC |
| Trial to paid | 20% | 25% | -20% CAC |
| Combined Effect | - | - | -50% CAC |
Building Organic Channels:
| Channel | Setup Cost | Time to ROI | Long-term CAC |
|---|---|---|---|
| SEO | $3-10K/mo | 6-18 months | $20-80 |
| Content marketing | $2-8K/mo | 6-12 months | $30-100 |
| Community | $1-5K/mo | 3-9 months | $15-50 |
| Referral program | $5-20K setup | 2-4 months | $30-80 |
The Referral Multiplier:
- Average customer refers 1.3 new customers with good program
- Referred customers have 25% higher LTV
- Referred customer CAC is 50-70% lower
- Best programs: Dropbox, PayPal, Uber achieved viral coefficients >1
Sales Efficiency Improvements:
- Lead scoring: Focus on high-intent prospects (20% efficiency gain)
- Sales enablement: Better tools reduce cycle time (15% gain)
- Qualification: Disqualify poor fits early (25% CAC reduction)
- Automation: Nurture sequences reduce manual touchpoints
The Ultimate CAC Hack: Build something people want to talk about. Word-of-mouth has near-zero CAC and highest conversion rates. Product quality > marketing spend for sustainable CAC reduction.
Pro Tips
- 💡Track CAC by cohort monthly—early warning of deterioration saves companies.
- 💡Separate blended CAC from paid CAC in all investor presentations.
- 💡Target 12-month CAC payback for SaaS, 3 months for e-commerce.
- 💡Invest in organic channels early—they take time to compound but dramatically reduce blended CAC.
- 💡Include ALL costs: salaries, tools, and allocated overhead. Partial CAC is self-deception.
- 💡Monitor LTV:CAC by channel to identify where to scale and where to cut.
- 💡Rising CAC is not always bad if LTV rises faster—watch the ratio, not just the number.
- 💡Use cohort analysis to separate true LTV from optimistic projections.
- 💡Question CAC numbers that seem too good—they usually exclude significant costs.
- 💡Build referral programs: customer-referred customers typically have 50% lower CAC and 25% higher LTV.
- 💡Implement server-side tracking to recover 20-40% of lost attribution from iOS privacy changes.
- 💡Focus on reducing CAC payback period before scaling - sub-12-month payback enables self-funded growth.
- 💡Test creative variations relentlessly - top 10% of ad creatives often perform 5x better than average.
Frequently Asked Questions
A good CAC depends on your customer lifetime value (LTV). Target a 3:1 LTV:CAC ratio minimum. For SaaS, this typically means CAC should be recoverable within 12 months of customer revenue. E-commerce generally needs sub-3-month payback. The "good" CAC is one that allows profitable scaling—if you can profitably acquire customers at $500 CAC, that is better than unprofitably acquiring them at $100.
