Customer Acquisition Cost (CAC) Calculator
Calculate customer acquisition cost, payback period, and the LTV needed to clear a 3:1 ratio. Standard SaaS unit-economics formula used by VC firms and growth teams.
Customer acquisition cost
£500.00
- Monthly gross profit per customer
- £37.50
- CAC payback period (months)
- 13.33
- Target LTV at 3:1 ratio
- £1,500.00
- Total sales & marketing spend
- £50,000.00
- New customers acquired
- 100
CAC is the fully-loaded cost of acquiring one new paying customer — every dollar of sales and marketing spend in the period divided by every net-new customer it brought in. The payback period compares CAC against the monthly gross profit each customer generates: investors typically want payback under 12 months and an LTV:CAC ratio of at least 3:1 for a healthy SaaS business.
How to use this calculator
Enter four numbers for a single period (usually a month or a quarter): the total sales and marketing spend over that period, the number of net-new paying customers acquired in the same period, the average monthly revenue you collect per customer (ARPU), and your gross margin as a percentage. The calculator returns CAC, the monthly gross profit each customer contributes, the CAC payback period in months, and the lifetime value you would need to clear the textbook 3:1 LTV:CAC ratio. Match the period boundaries — if spend is quarterly, count customers won in the same quarter.
How the calculation works
CAC is total sales and marketing spend divided by new customers acquired in the same period. "Fully loaded" means everything: salaries of sales reps, paid ads, marketing salaries, agency fees, tools, content production, attribution software. The denominator counts net-new paying customers (gross new customers — usually not net of churn for the CAC calc itself). Payback period is CAC divided by the monthly gross profit each customer generates (ARPU × gross margin). LTV:CAC of 3:1 is the widely-cited investor rule of thumb for a healthy SaaS business; below 1:1 means you lose money on every customer.
Worked example
A SaaS company spends $50,000 on sales and marketing in a month and signs 100 new customers, paying $50/month with a 75% gross margin. CAC = $50,000 / 100 = $500. Monthly gross profit per customer = $50 × 0.75 = $37.50. Payback = $500 / $37.50 ≈ 13.3 months. To clear a 3:1 LTV:CAC ratio, lifetime value must reach 3 × $500 = $1,500 — about 40 months at $37.50/month of gross profit, implying customer lifetime needs to exceed 40 months (i.e. annual churn below ~30%).
Frequently asked questions
What counts as sales and marketing spend in CAC?
Fully loaded — every dollar spent acquiring customers. Include sales rep base salaries, commissions and bonuses, sales-engineering and sales-ops salaries, marketing team salaries, paid ads (Google, Meta, LinkedIn), agency fees, content production, sponsorships, events and trade shows, attribution and CRM tools, and SDR outsourcing. Exclude product engineering, customer success and support (those serve existing customers), and general overhead. The single biggest mistake is counting only paid ad spend — that vastly under-states CAC and makes payback look better than it is.
Should CAC use gross new customers or net new customers?
Gross new customers — the number you actually won in the period — is the standard denominator for CAC. Subtracting churn here would conflate two different things: how expensive it is to acquire a customer, and how long they stay. Churn is captured separately through LTV and the LTV:CAC ratio. Some analysts publish "net CAC" (subtracting gross profit from existing customers) for a fuller picture, but the headline CAC reported to investors is gross.
What is a good CAC payback period?
Under 12 months is the consensus benchmark for a healthy SaaS business; 12 to 18 months is acceptable in higher-ACV enterprise segments; over 18 months becomes a financing problem — you tie up cash for too long before recouping the customer. SMB SaaS often targets sub-6-month payback because churn is higher and the company cannot afford slow recoveries. Bessemer and OpenView publish payback benchmarks by ARR band each year — at scale (>$50M ARR) the top quartile is around 15 months and the bottom quartile is above 30.
What is the LTV:CAC ratio and why 3:1?
LTV:CAC compares the gross profit a customer generates over their lifetime against the cost to acquire them. The 3:1 rule of thumb attributed to David Skok and adopted by VCs across SaaS investing: below 1:1 you are destroying value on every customer; 1:1 to 3:1 you are spending too much on acquisition relative to monetisation; 3:1 to 5:1 is the healthy band; above 5:1 you are likely under-investing in growth and a competitor will outpace you. The number is a rule of thumb, not a law — defensible businesses with very long lifetimes (telco, infrastructure) can sustainably operate at higher ratios.
How does CAC differ for paid vs organic channels?
Blended CAC mixes everything; channel CAC breaks it out. Paid CAC (ads + paid social + sponsorships) usually rises over time as a channel saturates. Organic CAC (SEO content, brand, word-of-mouth, referrals) is often much lower at the unit level but harder to scale on demand. Most growth teams track both — blended CAC for board reporting, channel CAC for spend allocation. A company that quotes only blended CAC is hiding either an unprofitable paid funnel or an under-credited organic engine.
How is CAC different for B2C vs B2B?
B2C CAC is dominated by paid media and is typically tens to low-hundreds of dollars per customer; ARPU is low, payback is fast, lifetime is short. B2B SaaS CAC is dominated by sales-rep salaries, is typically thousands to tens of thousands of dollars per customer (enterprise CAC can exceed $100,000), and is paid back over much longer contracts. The math is the same; the inputs are an order of magnitude apart. Use sales-led-growth assumptions for B2B (long sales cycles, multi-touch) and product-led-growth assumptions for B2C (self-serve, short cycles).