Free startup growth tool
Free CAC, LTV:CAC ratio, and payback period calculator.
Customer Acquisition Cost (CAC) is the total sales and marketing spend divided by the number of new customers acquired in a given period. It tells you how much you pay to win a customer and is a foundational unit-economics metric for any startup.
Customer Acquisition Cost
$458
Per new customer this month period.
LTV:CAC ratio
5.24:1
Underinvesting.
CAC payback period
5.1 mo
Months to recover acquisition cost.
Inputs
Add total sales and marketing spend for a period, the new customers acquired in that period, and optional fields to unlock LTV:CAC and payback.
Period
All inputs below should reflect this same time window.
Optional inputs
Add LTV, gross margin, and ARPU to unlock LTV:CAC and payback period.
Results
Your LTV:CAC is unusually high - you may be underinvesting in growth at a $458 CAC.
$458
Total spend ($55.0K) divided by 120 new customers.
5.24:1
Underinvesting5.1 mo
Months of gross profit to recover CAC.
Your LTV:CAC is very high, which often means you are leaving growth on the table. Consider increasing acquisition spend.
Channel breakdown
Optional. Enter spend and customers per channel to see where your blended CAC actually comes from.
| Channel | Spend | Customers | CAC | |
|---|---|---|---|---|
| $343 | ||||
| $364 | ||||
| $133 | ||||
| $83 | ||||
| Blended | $25,500 | 105 | $243 |
How to use
Step 1
Total every dollar that went toward acquiring customers in the period: salaries on sales and marketing teams, ad spend, agency fees, tools, and content costs.
Step 2
Count only net new paying customers won during the same period. Do not include renewals, expansions, or free signups in this number.
Step 3
CAC = Total sales and marketing spend / Number of new customers. Compare it to LTV and gross margin to see whether your unit economics work.
FAQ
There is no universal target, but most SaaS businesses aim for a CAC that is recovered within 12 months and an LTV that is at least 3x CAC. A 'good' CAC depends on your average contract value, gross margin, and sales cycle length.
Customer Acquisition Cost is calculated by dividing total sales and marketing spend in a period by the number of new customers acquired in that same period. Formula: CAC = (Sales spend + Marketing spend) / New customers.
An LTV:CAC ratio above 3:1 is considered healthy for most SaaS and subscription businesses. Between 1:1 and 3:1 is risky and suggests you are spending too much to acquire customers. Below 1:1 means you lose money on every customer and the model is unsustainable.
CAC payback period is the number of months it takes to recover the cost of acquiring a customer through gross profit. The formula is CAC / (Average MRR per customer x Gross margin %). Most healthy SaaS businesses target a payback period under 12 months.
You can lower CAC by improving conversion rates, doubling down on lower-cost channels like organic and referral, increasing average deal size, shortening sales cycles, retargeting warm leads, and removing channels with high CAC and weak retention.
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Keep going
Idea Score turns an idea into a full validation report with market analysis, competitor research, scoring, and research-backed recommendations - so you know whether the CAC you are spending is going somewhere worth winning.
Score your startup idea