CAC
Customer Acquisition Cost
The fully loaded sales and marketing cost to acquire one new paying customer. The number VCs ask about first, and the one most easily manipulated by leaving out costs.
You spent $500k on sales & marketing last quarter and acquired 50 new customers. Your CAC is $10,000. But if 20 of those 'customers' were actually expansion deals from existing accounts, your real new-logo CAC is $500k ÷ 30 = $16,667. Big difference.
Every company calculates CAC differently, and most calculate it wrong. The classic move: count only ad spend and divide by all new customers. Suddenly your CAC looks amazing.
What actually belongs: all sales and marketing salaries, commissions, tools, agencies, events, content. Everything you spend to acquire. Divided by new paying customers only (not trials, not expansions, not "verbal commits").
The real question isn't "what's our CAC?" It's "how long until we make that money back?" A $50k CAC is fine if your customer pays $200k/year. A $500 CAC is terrible if they churn in month 3.
Define ItOther Definitions
“The total sales and marketing spend for new customer acquisition in a period, divided by the number of new customers acquired in that period. Only new paying customers count in the denominator.”
“All go-to-market costs to win a new customer, including salaries, commissions, paid media, tools, and allocated onboarding costs if part of the initial sale.”
“The average cost to acquire a B2B SaaS customer, varying dramatically by segment. Ranges from low hundreds for SMB self-serve to $30k-$100k+ for enterprise deals.”
“Total investment in sales and marketing activities over a period divided by new customers acquired, used alongside LTV:CAC ratio and payback period to assess efficiency.”
The formula is simple: total S&M spend ÷ new customers. The complexity is what you include and who counts as a "new customer."
Wall Street Prep emphasizes "fully loaded" costs. If you're only counting ad spend, you're lying to yourself. Maxio includes allocated onboarding if it's part of the sale. First Page Sage shows the massive range by segment ($500 SMB to $100k+ enterprise).
The investor view: CAC alone is meaningless. What matters is CAC payback (months to recover the investment) and LTV:CAC ratio (total value created vs. cost to acquire). A 3:1 LTV:CAC is the classic "healthy" benchmark, but context matters. Enterprise can run higher CAC with longer payback if retention is strong.
MistakesCommon Mistakes
Counting only ad spend and ignoring salaries, commissions, and tools
Including expansion customers in denominator while counting all S&M costs
Mixing time windows (one quarter of spend with a year of customers)
Not adjusting for long enterprise sales cycles (6-12+ months)
Comparing CAC across companies without normalizing for ACV and segment
CAC climbing but pipeline isn't?
The leak is in your funnel efficiency, not your ad spend. We find where deals stall and fix the conversion.
Experience across
