Customer Acquisition Cost (CAC) measures how much you spend on marketing and sales to acquire each new customer. Calculation: total marketing + sales spend in a period divided by new customers acquired in that period. Two derived metrics matter: LTV/CAC ratio (lifetime value divided by acquisition cost — 3x is the standard healthy SaaS target, below 1x means you're losing money on each customer) and CAC payback months (how long until each customer's gross margin contribution covers their acquisition cost).

Healthy benchmarks: LTV/CAC ≥3x is the standard SaaS target — meaning each customer's lifetime gross margin is at least 3x what you paid to acquire them. Above 5x and you're probably under-investing in growth. Below 3x and you have a unit-economics problem. CAC payback under 12 months is ideal for most B2B SaaS; under 18 for enterprise sales cycles; above 24 months is concerning unless you have very strong net revenue retention (110%+ NRR can sustain longer payback).

The trap to watch: CAC tends to inflate as you scale (cheap channels saturate, more expensive channels become necessary, sales-team costs grow). Track CAC by channel and by cohort to see what's actually happening — blended CAC can mask channel-level deterioration. For lifetime value modelling see our LTV Calculator.