How to calculate CAC and CAC payback
Customer acquisition cost and CAC payback without the finance-speak: the formulas, what to include, worked examples, and healthy numbers for SaaS.
TLDR
- CAC = everything you spent to win customers ÷ the number of new customers. Include salaries and tools, not just ads.
- CAC payback = CAC ÷ (monthly revenue per customer × gross margin). It’s how many months until a customer has paid back what they cost.
- Under 12 months is healthy for SaaS selling to small businesses. Free calculators: CAC and payback period.
Customer acquisition cost
CAC = total sales and marketing cost ÷ new customers
For the same period. If you spent €30,000 on sales and marketing last quarter and won 100 customers, CAC is €300.
What goes in “total cost”
This is where people cheat, usually without meaning to. A real CAC includes:
- Ad spend, every channel
- Salaries of the marketing and sales people (or the share of their time spent on acquisition)
- Tools: your CRM, email platform, ad tools, analytics
- Agencies, freelancers, contractors
- Events, sponsorships, swag
“Our CAC is €40” usually means “our paid CAC is €40”, ad spend only. Fine as a channel number, misleading as a company number. Track both: blended CAC (everything) and paid CAC per channel.
A worked example
| Cost | Monthly |
|---|---|
| Ads (Google, Meta, LinkedIn) | €8,000 |
| One marketer and half a salesperson | €9,000 |
| Tools | €1,000 |
| Total | €18,000 |
| New customers | 60 |
| Blended CAC | €300 |
CAC payback
CAC alone doesn’t tell you much. €300 is cheap if customers pay €200 a month and terrible if they pay €5. Payback ties it to revenue:
CAC payback (months) = CAC ÷ (monthly revenue per customer × gross margin)
With €300 CAC, €50 a month per customer, and an 80% gross margin: 300 ÷ (50 × 0.8) = 7.5 months.
Gross margin matters because revenue isn’t profit. A SaaS with heavy hosting or support costs keeps less of each €50.
What’s healthy
Rough rules of thumb for SaaS:
- Selling to small businesses: under 12 months. They churn faster, so you need your money back sooner.
- Mid-market: 12 to 18 months.
- Enterprise: longer is fine, because contracts are annual and customers stay for years.
And the classic pairing: LTV:CAC of 3:1 or better. I wrote a longer take on that on my own blog, about why the LTV to CAC ratio gets abused in B2B SaaS.
For ecommerce
If you sell products, not subscriptions, look at break-even ROAS for first-order profitability, and CAC against average order value and repeat rate.
Keep the context
The number goes on a slide. The ads, landing pages, and onboarding flows behind a good CAC are worth keeping too, so next quarter you know what to repeat. That’s what a swipe file is for, and the competitor research use case shows how to keep the other side: what your competitors charge and how their pricing pages changed.
FAQ
What is the formula for CAC?
CAC is total sales and marketing cost in a period divided by the number of new customers in that period. Spend €30,000 in a quarter, win 100 customers, and your CAC is €300.
How do you calculate CAC payback?
CAC payback in months is CAC divided by monthly revenue per customer times your gross margin. A €300 CAC, €50 a month, and 80% margin pays back in 300 / (50 × 0.8) = 7.5 months.
What's a good CAC payback period?
For SaaS selling to small businesses, under 12 months is healthy. Mid-market companies often run 12 to 18 months, and enterprise can go longer because customers stay for years.