Glossary entry
What is CAC (Customer Acquisition Cost)?
CAC is the fully-loaded cost to acquire one paying customer, including ad spend, agency fees, software, and team time. Unlike CPA, CAC accounts for everything required to win the customer, not just the paid media bill.
How to calculate CAC
Total sales and marketing spend in a period divided by new customers acquired in that same period. 'Total spend' includes ad spend, agency retainers, software (CRM, analytics, ABM), salaries (sales and marketing headcount), and content production.
CAC payback period
Months of customer revenue needed to recover CAC. Healthy SaaS targets 12 to 18 months. Healthy ecommerce: under one quarter, ideally first-order profit positive.
LTV-to-CAC ratio
The cleanest health metric. Below 1.0 you lose money per customer. 1.0 to 3.0 is survival mode. 3.0 to 5.0 is healthy growth. Above 5.0 you're under-investing in growth.
How Unled Network helps
Lead Generation and Managed Campaigns drive the paid component of CAC. We also publish an LTV-CAC calculator in our free tools to model targets.
Related Unled Network services
Frequently asked
CAC vs. CPA?
CPA is the paid-channel slice. CAC is the entire cost - paid plus salaries, tools, and overhead.
What goes in 'fully loaded' CAC?
Ad spend, agency fees, software, team salaries directly responsible for acquisition, and content costs.
How fast should CAC be paid back?
SaaS: 12 to 18 months. Ecommerce: first order if possible, three months max.
Should I share CAC publicly?
Investors yes, customers no. Public CAC tells competitors exactly what you'd pay to outbid them.