Get specific about what goes in the numerator and denominator so CAC reflects the true cost to win a net-new customer in a given period.

What to include in Acquisition Spend

• Paid media and placements: search, social, display, affiliates, sponsorships, events
• Creative and production: design, copy, video, landing pages, experimentation tools
• Sales and marketing salaries and benefits tied to acquisition: SDRs, AEs, demand gen, marketing ops
• Technology and data: ad platforms, attribution, CRM, MAP, enrichment, analytics
• Programs and incentives: partner commissions, reseller fees, new-logo spiffs

What to exclude

• Retention and expansion costs: customer success, account management time for existing customers, loyalty programs
• General brand or corporate overhead not supporting acquisition in-period
• Onboarding and support for existing customers unrelated to new-logo conversion

Set the denominator correctly

• Use count of net-new customers won in the same period as the spend
• Track by channel and by cohort (e.g., "Q2 paid search" or "Event leads from May") for apples-to-apples analysis
• Segment New CAC versus Blended CAC if you choose to include expansions; report both, clearly labeled

Formula

CAC = Acquisition spend ÷ Number of new customers

Example

If quarterly acquisition spend is $600,000 and you won 400 new customers, CAC = $1,500.

CAC is most useful when paired with downstream value and time to recover the investment.

Use LTV to judge affordability

• LTV/CAC helps you decide whether growth is efficient. Many teams aim for roughly 3:1 at scale, but early-stage motions may run lower while proving product-market fit.
• Ensure LTV uses gross margin revenue and realistic retention to avoid overstating value.

Track payback to manage cash

• CAC payback period measures how many months of gross profit are needed to recoup acquisition cost.
• Shorter payback improves cash efficiency and reduces risk across channels.

Read channel health, not just spend

• Watch conversion rate, sales cycle length, and win rate by channel. Rising CAC with stable or improving LTV/payback can still be acceptable if quality increases.
• Shift mix toward channels with durable intent, strong unit economics, and scalable volume.
• Run cohort views to surface delayed conversions from events, content, or partner motions before cutting investment prematurely.

Practical levers to optimize

• Improve conversion: sharper ICP targeting, message-market fit, landing page speed and clarity
• Shorten sales cycles: qualification, enablement, proof packages, pricing clarity
• Cut waste: negative keywords, frequency caps, creative fatigue checks, nurture clean-up
• Raise quality: creative testing, offer strategy, partner selection, audience refinement

Pitfalls to avoid

• Mixing retention costs into CAC, which inflates the metric and obscures true acquisition performance
• Mismatched periods between spend and customers won; align to the same window or use lagged cohorts
• Relying on blended CAC only; always report by channel and by campaign type
• Using revenue instead of gross margin in LTV, which overstates efficiency
• Optimizing only to lower CAC; prioritize profitable growth via CAC with LTV and payback

FAQs

• What is a good CAC? It depends on your model. Use LTV/CAC and payback as the decision frame rather than a universal benchmark.
• How often should we recalculate? Monthly for active channels, with quarterly deep dives by cohort.
• Should we include sales salaries? Yes, if those roles are directly tied to acquiring new customers in the period.
• What about brand spend? Include only if the objective and measurement tie to near-term acquisition; otherwise keep it separate and track blended effects with incrementality tests.

When reported with clear inclusions, cohorts, and companion metrics, CAC becomes a reliable steering metric for pricing, channel mix, and payback discipline.