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Customer Acquisition Cost (CAC) measures how much you spend to acquire each new customer. Learn how to calculate CAC, benchmark it by stage, and improve efficiency across your GTM funnel.
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Every founder knows growth costs money — Customer Acquisition Cost (CAC) tells you exactly how much.
It’s one of the most foundational metrics in startup finance, measuring how efficiently your sales and marketing efforts convert capital into new paying customers.
Getting CAC right isn’t just about budgeting. It’s about understanding your growth engine’s sustainability — how much you can spend, how fast you can scale, and when your model breaks.
Definition:
CAC = Total Sales & Marketing Spend ÷ Number of New Customers Acquired
Ideal Range:
Varies by model, but as a rule of thumb:
Recommended Playbook: Revenue Operations Playbook
CAC defines your unit economics — how much capital is required to buy growth.
When paired with retention and lifetime value (LTV), it tells you whether your business can scale profitably.
High CAC can be fine if your customers are sticky and your margins strong.
But when CAC rises faster than LTV, your model becomes unsustainable.
For investors, CAC is a proxy for:
[CAC](/glossary#customer-acquisition-cost-cac) = Total [Sales](/glossary#champion-sales) & [Marketing](/glossary#attribution-marketing) Expenses ÷ Number of New Customers
Example:
You spend $1,000,000 on sales and marketing in Q2 and acquire 200 customers.
[CAC](/glossary#customer-acquisition-cost-cac) = 1,000,000 ÷ 200 = $5,000
Exclude Customer Success and Product unless they’re directly tied to acquisition.
CAC by itself doesn’t tell the full story — it must be viewed in context with LTV, Gross Margin, and Payback Period.
| Metric | What It Tells You |
|---|---|
| CAC | Cost to acquire one new customer |
| LTV | Lifetime revenue from one customer |
| LTV:CAC Ratio | Long-term ROI on acquisition |
| CAC Payback Period | Time to recover acquisition costs |
Healthy businesses typically show:
| Stage | Typical CAC | Notes |
|---|---|---|
| Seed | $500–$1,500 | Manual, founder-led sales |
| Series A | $1,000–$5,000 | Building repeatable GTM motion |
| Series B | $5,000–$15,000 | Team scaling, marketing automation |
| Growth (C+) | $10,000–$30,000+ | Enterprise motion, multi-channel GTM |
CAC naturally rises with maturity — but efficiency should rise faster.
Tracking CAC over time shows whether your GTM model is scaling or straining.
When measuring marketing efficiency, track both Blended CAC (strategic) and Paid CAC (tactical).
CAC isn’t static — it improves as your flywheel spins faster.
Lower CAC often follows improvements in:
Efficiency compounds. Every operational improvement eventually reduces CAC.
Stop selling to everyone. The more focused your targeting, the better your conversion rates.
Audit every stage — awareness, interest, decision, action. Patch leaks early.
Let usage and value drive expansion before human touchpoints.
Earn inbound traffic through credibility, not ads alone.
Track lead source, cost per lead, and close rate using a consistent attribution model.
Always lag GTM spend by one quarter for accuracy — Q2 customers result from Q1 spend.
| Metric | Relationship | Use Together |
|---|---|---|
| Sales Efficiency | Output of CAC spend | Benchmark GTM productivity |
| CAC Payback | Time to recover CAC | Measure capital velocity |
| LTV:CAC Ratio | Long-term ROI | Evaluate scalability |
| Burn Multiple | Macro efficiency | Assess cash burn per growth |
These interlocking metrics form the backbone of your GTM health dashboard.
Sustainable growth isn’t about lowering CAC at all costs; it’s about making each dollar of CAC more productive.
Explore: Revenue Operations Playbook
Compare: [Sales Efficiency](/benchmarks/sales-efficiency)
Assess: GTM Readiness Diagnostic
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