SaaS Marketing
CAC (Customer Acquisition Cost)
Quick definition
CAC is the total sales and marketing spend required to acquire one paying customer.
Calculate CAC as: (Sales + Marketing spend in a period) ÷ (Number of new customers acquired in that period). Include salaries, tools, ad spend, and content production.
Why CAC (Customer Acquisition Cost) matters
CAC alone is meaningless — it must be evaluated against LTV. A healthy SaaS company typically targets LTV:CAC of 3:1 or higher.
How CAC (Customer Acquisition Cost) works in practice
Lower CAC by investing in compounding channels (SEO, content, referrals, PLG), improving conversion rates, and shortening sales cycles.
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Related terms
LTV (Customer Lifetime Value)
LTV (Customer Lifetime Value) is the total revenue a SaaS company expects to earn from a single customer over the entire relationship.
CAC Payback Period
CAC Payback Period is the number of months it takes for a customer's gross margin to repay the cost of acquiring them.
Product-Led Growth (PLG)
Product-Led Growth (PLG) is a go-to-market strategy where the product itself drives user acquisition, conversion, and expansion — typically through free trials, freemium, or self-serve signup.