How to Calculate SaaS Customer Acquisition Cost (CAC)
Calculate your SaaS customer acquisition costs (CAC) by following these steps:
- Determine your Total Sales and Marketing Expenses. This includes all costs related to sales and marketing efforts, such as salaries, advertising, and tools. For example, a small SaaS company might spend $10,000 a month, while a larger one could spend $100,000.
- Identify the Number of New Customers Acquired during the same period. This is the total number of new paying customers you gained during the same period you measured your expenses. A small SaaS might acquire 100 new customers in a month, whereas a larger company could acquire 1000.
- Divide your Total Sales and Marketing Expenses by your Number of New Customers Acquired. This calculation results in your CAC. It shows how much you’re spending to gain each new customer. Using the example, the small SaaS CAC is $10,000 / 100 = $100, and the larger SaaS CAC is $100,000 / 1000 = $100.
- Interpret your CAC. Your CAC represents the cost of acquiring one new customer. Lower CAC values are generally preferred. A CAC of $100 means you’re spending $100 to acquire each customer. Keep track of your CAC trends to identify areas for improvement.