Why the answer is “it depends”, but we’ll still give you actual numbers (and a reality check)
Let’s face it..talking about Customer Acquisition Cost (CAC) is like discussing calories at a buffet. Everyone knows it matters, but most are winging it. For B2B SaaS businesses, CAC is the North Star that mysteriously flickers. You’ll hear whispers of “industry benchmarks” and “rule-of-40,” and before you know it, you’re elbow-deep in spreadsheets trying to reverse-engineer CAC from your paid media budget, outbound SDR costs, and your founder’s LinkedIn rants.
So, what is a good CAC? Is it $200? $2,000? Your left kidney? Pull up a chair..we're about to untangle the myth, maths, and madness around CAC.
The Goldilocks Zone: Not Too High, Not Too Low
Here’s the dirty secret: there’s no universal “good” CAC. It’s all about context..your deal size, sales cycle, pricing model, growth stage, and whether your sales team needs a spa day after every closed deal.
That said, for B2B SaaS, these broad ranges give us a starting point:
| Business Type | Average CAC (USD) |
|---|---|
| SMB-focused SaaS (Self-serve) | $200 – $1,000 |
| Mid-market SaaS (Sales-assisted) | $1,000 – $5,000 |
| Enterprise SaaS (Field sales, long cycle) | $10,000 – $50,000+ |
But don’t get too cosy with those numbers. You could be overspending and underspending simultaneously - if you’re not looking at CAC alongside payback period and LTV.
Case in point?
A $4,000 CAC sounds scandalous - until you realize the average customer brings in $100,000 over five years. Suddenly, that CAC is sipping champagne on a yacht labelled “smart risk”.
LTV:CAC Ratio: The Real Metric You Should Be Watching
Right, here’s the thing most startup decks conveniently skip past: CAC only makes sense in tandem with lifetime value (LTV).
The benchmark most investors and savvy operators cling to is the LTV:CAC ratio. And the magic number? Drumroll... it’s 3:1.
Meaning: For every $1 you spend acquiring a customer, you should be making $3 in return over the customer's lifecycle.
If your ratio is:
- 1:1 or lower – You’re bleeding cash faster than a free trial funnel with no follow-up.
- 2:1 – Acceptable if you’re aggressively growing or early stage.
- 3:1 to 4:1 – You’re in the sweet spot. Not too frugal, not too reckless.
- 5:1 or higher – Congrats! Or… red flag. Are you underspending and leaving growth on the table?
It’s like dating - if you’re spending zero effort to woo your customers, they’re probably not that into you.
Payback Period: Because Cash Flow is Queen
Imagine spending $5,000 to land a client, only to wait 18 months to recoup it. Even if your LTV is lush, that’s a long time to hold your breath.
The ideal CAC payback period?
- < 6 months – Glorious. This is B2B SaaS nirvana.
- 6–12 months – Still solid. You’ve got decent working capital or investors who believe in your roadmap.
- 12–18 months – Tolerable if you’re enterprise-focused.
- > 18 months – Proceed with caution. Or an investor pitch deck full of hope and unicorn emojis.
Keeping the payback window short means you’re not just “growth hacking” - you’re building a business that doesn’t need an IV drip of VC funding forever.
Acquisition Channels: Some CACs Are Just Built Different
Where your customers come from drastically changes your CAC.
Here’s a mini CAC breakdown per channel, assuming a mid-market SaaS product:
| Channel | CAC Range | Notes |
|---|---|---|
| Paid Search | $500–$1,500 | Works best with high-intent terms; watch out for CPC inflation. |
| Outbound SDR | $1,000–$5,000 | Labour-intensive, but can crack open lucrative accounts. |
| Events & Trade Shows | $2,000–$10,000 | Good for high-ticket enterprise deals, but ROI is hard to track. |
| SEO/Content | $200–$1,000 | Compounding returns, but slow burn. Patience = ROI. |
| Product-led Growth (PLG) | $50–$500 | Freemium + upsell. Low CAC, but high churn risk. |
Spoiler alert: CAC from organic search tends to be lowest over time, but requires up-front investment in content and distribution (and someone who actually understands B2B buyer journeys - not just writing listicles about “10 CRM Tools for 2025”).
When CAC Lies: Common Calculation Pitfalls
Let’s talk accounting fiction. Many CAC calculations are optimistic to the point of parody. Some common sins:
- Not including salaries – Yes, your SDRs and marketers need food. Include fully loaded headcount costs.
- Skipping tech stack costs – That $50k/year Salesforce subscription isn’t a “nice to have”. It’s CAC.
- Ignoring churn – High churn inflates your effective CAC over time. You’re not really acquiring customers if they leave in 2 months.
- Over-simplifying blended CAC – Don’t lump all CAC together. Segment by acquisition channel and customer type for real insights.
It’s like tracking your weight without counting midnight snacks. Denial isn’t a strategy.
CAC by Growth Stage: A Moving Target
What’s acceptable CAC evolves as you grow:
- Pre-Product-Market Fit: CAC will be a dumpster fire. That’s okay. Focus on learning.
- Early Growth (Seed–Series A): CAC should start declining as you refine ICP and GTM.
- Mid-Stage (Series B–C): Efficiency kicks in. CAC stabilises; payback improves.
- Late-Stage (Scaling): You’ll see CAC rise again as you saturate easy wins and move upmarket.
This curve isn’t linear. But tracking CAC over time is like checking your credit score - painful, but necessary for long-term health.
Quick CAC Scorecard
Want to see where you stand? Here’s a little scorecard:
| Metric | Your Value | Green | Amber | Red |
|---|---|---|---|---|
| CAC Customer Acquisition Cost | Enter dollar amount | |||
| LTV:CAC Ratio Lifetime Value to CAC | Enter ratio (e.g., 3 for 3:1) | |||
| CAC Payback Period In months | Enter number of months |
This isn’t gospel, but if you’re in the red across the board… time to rework your GTM or rethink your sales funnel (or maybe just stop buying $600 leads from an ad agency run by your cousin).
So..What Did We Learn?
A “good” CAC in B2B SaaS isn’t a number - it’s a ratio, a timeline, and a reflection of your overall go-to-market health. Treat it like your metabolic rate: dynamic, context-dependent, and occasionally sabotaged by poor decisions (yes, we’re still talking about spending $80k on an event booth next to the snack table).
So rather than obsessing over CAC in isolation, focus on:
- Tracking CAC by channel and segment
- Matching it against LTV and payback period
- Watching for red flags as you scale
Want to see how your CAC stacks up? Run a proper CAC audit - spreadsheet, whiteboard, therapy session - whatever gets you there. It’s worth it.
FAQ
1. What exactly is Customer Acquisition Cost (CAC)?
CAC is the total cost of winning a new customer, including all sales and marketing expenses divided by the number of new customers acquired in a specific time frame. This includes ad spend, sales salaries, software tools, content creation, events—basically everything it takes to turn a stranger into a paying customer.
2. What’s considered a “good” CAC for B2B SaaS?
It depends on your pricing model and target market. For self-serve SaaS selling to SMBs, $200–$1,000 is typical. For mid-market and enterprise SaaS with longer sales cycles, CAC can stretch into the thousands or even tens of thousands—$5,000–$50,000 isn’t unheard of if the lifetime value justifies it.
3. How does CAC relate to lifetime value (LTV)?
CAC means nothing without LTV. A healthy business typically maintains an LTV:CAC ratio of at least 3:1. That means for every dollar you spend acquiring a customer, you should earn $3 or more over the duration of the relationship. Ratios below 2:1 often indicate poor unit economics or a leaky retention funnel.
4. What’s the CAC payback period, and why does it matter?
The CAC payback period is how long it takes to earn back the money you spent to acquire a customer. It matters because it impacts your cash flow and runway. Shorter payback periods (under 12 months) allow you to reinvest faster; anything beyond 18 months starts to stress even well-funded companies.
5. Why does CAC vary so widely between acquisition channels?
Because every channel has different upfront costs, conversion rates, and time-to-close. Paid search often drives lower CAC with quicker conversions, while outbound sales or event-driven deals might have higher CACs but bring in bigger contract values. Channels like SEO and PLG offer low CAC at scale but take time to ramp.
6. How should early-stage SaaS companies think about CAC?
Expect CAC to be high and volatile early on—you're experimenting with messaging, targeting, and GTM fit. The goal isn’t efficiency at this stage; it's learning. As you validate your ICP and fine-tune your funnel, CAC should naturally improve. Trying to optimise CAC too early can lead to premature scaling.
7. Can CAC be too low?
Absolutely. A low CAC might indicate underinvestment in growth, poor lead quality, or over-reliance on one channel. If your LTV:CAC ratio is 6:1 or more, it could mean you're missing out on growth by not spending aggressively enough on scalable acquisition methods.
8. What mistakes do companies make when calculating CAC?
Common missteps include excluding salaries and overheads, ignoring software/tooling costs, lumping all customers into one blended CAC, and failing to segment by acquisition source. A realistic CAC calculation includes everything it costs to win a customer—not just ad spend and commissions.
9. How does product-led growth (PLG) affect CAC?
PLG models typically show lower CAC upfront because users enter through free trials or freemium tiers. But the true cost of acquisition includes the cost to convert those free users into paying ones, which may involve onboarding support, in-app nudges, email nurturing, and customer success outreach.
10. What are practical ways to reduce CAC without hurting growth?
Optimise your funnel to improve conversion rates, double down on organic acquisition (content, SEO, referrals), sharpen your ICP to avoid wasted spend, and use data to attribute CAC accurately across channels. Reducing CAC isn’t about slashing budgets—it’s about making your acquisition more precise and effective.
