Definition
CAC, customer acquisition cost, is the average amount a company spends to acquire one new customer. The formula in words is total sales and marketing cost over a period, including salaries, advertising, tools and commissions, divided by the number of new customers won in that period. If a company spends €100,000 in a quarter and wins 50 customers, its CAC is €2,000. It is the price you pay for growth, and it is meaningful only when compared to what a customer is worth.
In a company, CAC is tracked by channel and segment, because a blended average hides that one channel is profitable and another is burning money. It sits next to two companions: LTV (customer lifetime value), which tells you whether the customer is worth the cost, and CAC payback, the months of gross margin needed to recover the acquisition cost. Healthy B2B SaaS companies aim for an LTV to CAC ratio of at least 3 to 1 and payback of 12 months or less; 2026 medians sit around 15 months.
The misconception is that lower CAC is always better. A very low CAC often means you are underinvesting in growth or only reaching the easiest customers. The right CAC is the one that pays back fast enough to fund the next customer. Another common error is leaving costs out: companies that exclude salaries or onboarding costs report a CAC that looks good and hides a business that does not work at scale.
In practice
A company spending €40,000 a month on marketing and two salespeople to win 25 customers has a CAC of about €1,600. With customers paying €200 a month at 80% gross margin, payback takes 10 months, which is healthy. When paid ads pushed CAC to €3,000 with no change in customer value, payback stretched to 19 months and the channel was cut.
Why it matters
CAC is the number that tells you whether your growth is an investment or a subsidy. In the companies I run, no channel gets more budget until its CAC and payback are known; the answer often surprises the people spending the money.
Frequently asked questions
- What is a good CAC payback period for SaaS?
- Under 12 months is healthy and under 6 months is excellent, especially for product-led or small business models. Median B2B SaaS payback in 2026 benchmarks is around 15 months. Enterprise companies can tolerate 18 to 24 months if net revenue retention is strong, because customers grow after they land.
- What should be included in CAC?
- All costs of acquiring new customers over the period: advertising and paid media, sales and marketing salaries and commissions, agency fees, tools and software, events and content production. Some companies also include onboarding costs. Excluding salaries is the most common way CAC gets flattered.