Customer Acquisition Cost (CAC) Calculator
Divide sales and marketing spend by new customers to get CAC — then compare it to LTV for the ratio that decides whether growth pays.
How it works
CAC = sales & marketing spend ÷ new customers acquired · LTV:CAC = lifetime value ÷ CAC
Customer acquisition cost is the fully-loaded sales and marketing spend for a period divided by the number of new customers it produced. On its own CAC only matters relative to what a customer is worth, so it is judged by the LTV-to-CAC ratio: roughly 3:1 is considered healthy. A ratio below 1 means you lose money on every customer; a very high ratio can signal you are underinvesting in growth.
Worked example
Spending $50,000 on sales and marketing to win 200 new customers gives a CAC of 50,000 ÷ 200 = $250. Against a $900 margin-adjusted LTV, the LTV:CAC ratio is 900 ÷ 250 = 3.6:1 — comfortably above the 3:1 benchmark.
Frequently asked questions
What should CAC include?
All fully-loaded costs of acquiring customers: ad spend, marketing salaries and tools, sales team compensation, and agency or commission fees for the period — divided by the customers those efforts brought in.
What is a good LTV:CAC ratio?
About 3:1 is the widely cited benchmark: a customer is worth roughly three times what you paid to acquire them. Below 1:1 is unsustainable; much above 5:1 may mean you are underinvesting in growth.
What is CAC payback period?
It is how many months of a customer’s gross-margin revenue it takes to recover their CAC. Many SaaS businesses aim to recover CAC within about 12 months; longer paybacks strain cash flow even if LTV:CAC looks fine.
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Educational estimate, not financial advice.