Customer Acquisition Cost (CAC): The 5 Ways You're Still Calculating It Wrong

Your marketing manager says your CAC is $500.

You’re happy. That seems reasonable.

Then your CFO says your CAC is actually $1,200.

Who’s right?

Both of them. They’re just calculating it differently.

And the way you calculate CAC changes whether your unit economics make sense or not.

The 5 Ways to Calculate CAC

Method 1: Ad Spend Only (The Marketing Manager’s Way)

CAC = Ad Spend / New Customers

You spent $10,000 on Facebook ads and acquired 20 customers.

CAC = $10,000 / 20 = $500

This is what your ad platform tells you. This is what marketers claim.

But it’s wrong because it ignores everything else that costs money.

Method 2: Marketing Spend Only

CAC = Total Marketing Spend / New Customers

This includes:

Ad spend: $10,000
Marketing software (HubSpot, Klaviyo, etc.): $2,000/month, so $500 allocated to this month
Content creation (salaries, freelancers): $3,000
Total marketing spend: $13,500

CAC = $13,500 / 20 = $675

Better than Method 1, but still incomplete.

Method 3: Fully-Loaded Marketing

CAC = Total Marketing Spend + Marketing Team Salary / New Customers

This includes:

Ad spend: $10,000
Marketing software: $500
Content creation: $3,000
Marketing manager salary (allocated to this month): $5,000
Marketing coordinator salary: $2,500
Total: $21,000

CAC = $21,000 / 20 = $1,050

Closer to reality. But still missing something.

Method 4: Blended Acquisition Cost (Including Sales)

CAC = (Marketing Spend + Sales Team Salary) / New Customers

This includes:

All of Method 3: $21,000
Sales rep salary (allocated): $7,500
Sales tools: $1,000
Total: $29,500

CAC = $29,500 / 20 = $1,475

This is what a CFO would calculate. It’s the true cost of getting a customer because you need both marketing and sales.

Method 5: Full Blended with Customer Success

CAC = (Marketing + Sales + CS for first 90 days) / New Customers

Some argue you should include the cost of onboarding and early customer success because if customers don’t activate, they’re wasted acquisition spend.

This would add another $2,000-5,000 depending on your CS intensity.

CAC = $31,500-34,500 / 20 = $1,575-$1,725

Which Method Is Right?

It depends on what you’re trying to decide.

Use Method 1 (Ad spend only) for:

Channel comparison (“Is Facebook cheaper than Google Ads?”)
Real-time optimization (you need quick feedback on what ad spend works)

Use Method 2-3 (Marketing spend) for:

Budget planning (“How much should we spend on marketing this quarter?”)
Marketing team accountability (“Is our marketing efficient?”)

Use Method 4 (Blended with sales) for:

Unit economics (“Can we profitably acquire customers?”)
Fundraising (“What’s our real CAC?”)
Scaling decisions (“Should we hire more sales reps?”)

Use Method 5 (Full blended) for:

Long-term business planning
Decisions about whether to change your go-to-market model

Most founders use Method 1, which makes them think they’re doing better than they actually are.

Your board and investors expect Method 4 at minimum.

The Hidden Costs Most Founders Miss

Beyond the 5 methods, there are costs people forget:

1. Sales ops and enablement

Tools: Salesforce, Outreach, Gong, etc.
People who support sales (operations, analytics, enablement)
This is easily $1,000-3,000/month

2. Customer success onboarding

First 30-90 days of CS is customer acquisition, not retention
If you have a dedicated onboarding person, their salary belongs in CAC
Cost: $2,000-5,000 per month

3. Credit card processing and payment friction

Payment processing fees (2-3% of revenue)
If you acquire 20 customers at $5,000 each = $100k revenue
Processing fees: $3,000
This is effectively CAC because it’s the cost to process the sale

4. Refunds and chargebacks

Some percentage of “acquired” customers will refund or chargeback
If 5% of customers refund, you’re effectively paying CAC to acquire customers you don’t keep
If CAC is $1,000 and 5% refund, your effective CAC is $1,053

5. Recruiting and hiring (for sales and marketing)

Recruiting cost to hire sales reps: $5,000-15,000 per rep
Salary during ramp period (first 3 months of low productivity): $10,000-15,000
This should be amortized into CAC if you’re trying to understand true cost
Over a 2-year tenure, this adds maybe $100-200/month to CAC

Adjusting for Cohort Quality

Here’s where it gets nuanced: Not all customers cost the same to acquire.

Enterprise customers:

Might take 6 months and 5 sales reps to close
Blended CAC: $50,000-100,000

Mid-market customers:

Might take 2-3 months and 1 sales rep
Blended CAC: $5,000-15,000

SMB customers:

Might be acquired through self-serve with minimal sales
Blended CAC: $500-2,000

Freemium-to-paid customers:

Already have product engagement, minimal sales effort
Blended CAC: $100-500

Your “average” CAC might be $1,000, but the composition matters:

40% from Enterprise ($50k CAC)
40% from Mid-market ($10k CAC)
20% from SMB ($1k CAC)
Blended average: (0.4 × 50k) + (0.4 × 10k) + (0.2 × 1k) = $20k + $4k + $0.2k = $24.2k

But if you’re looking at just the “SMB channel,” your actual CAC is $1k, not $24.2k.

Mixing channels in your CAC calculation hides the truth.

Seasonal CAC Variation

CAC varies by season, which most founders don’t account for.

Q4 (holiday/budget season):

More buyers are active
Conversion rates are higher
CAC is lower (maybe 20-30% lower than average)

Q1 (post-holiday, freeze):

Fewer buyers are active
Budgets are tighter
CAC is higher (maybe 20-30% higher than average)

If you acquired most of your customers in Q4, your “average” CAC looks better than it will in Q1.

When planning next year, don’t assume Q4 CAC. Expect it will be higher.

CAC Payback Period

Beyond the absolute CAC number, measure how long it takes to pay back the acquisition cost.

CAC Payback Period = CAC / Monthly Gross Profit per Customer

Example:

CAC: $1,000
Customer’s first month revenue: $100
Gross margin: 80%
Gross profit from customer: $100 × 0.80 = $80
Payback period: $1,000 / $80 = 12.5 months

This tells you: It takes 12.5 months of this customer being subscribed to break even on their acquisition cost.

For SaaS:

Less than 6 months: Excellent (you recoup CAC very quickly, can reinvest)
6-12 months: Good (reasonable, allows for growth)
12-18 months: Acceptable (okay if LTV is high)
18+ months: Risky (takes a long time to become profitable on that customer)

The payback period is more important than the absolute CAC. A $5,000 CAC with a 3-month payback is better than a $1,000 CAC with a 12-month payback.

The Real Decision Framework

Here’s how to think about CAC:

Step 1: Calculate your blended CAC (Method 4 minimum)

Include marketing + sales fully loaded. This is your true cost to acquire a customer.

Step 2: Understand CAC by cohort

Is your Enterprise CAC wildly different from SMB? Segment it.

Step 3: Calculate CAC payback period

How long until the customer pays for their acquisition cost?

Step 4: Compare to LTV:CAC ratio

For sustainable businesses:

SaaS: LTV should be 3-5x CAC
E-commerce: 1.5-3x CAC (lower because of lower margins)

Example:

CAC: $1,000
LTV: $3,000
LTV:CAC ratio: 3:1

This is healthy. You’re spending $1 to acquire a customer worth $3.

Step 5: Account for seasonality and cohort quality

Your Q4 CAC is not your average CAC. Q1 will be different.

Your enterprise CAC is not your SMB CAC. Don’t confuse them.

When Your CAC Is Too High

If CAC is high and payback is long, you have a few options:

1. Improve conversion rates

Better landing pages, clearer messaging, easier signup
Same marketing spend, more customers = lower CAC

2. Reduce marketing spend

Stop spending on inefficient channels
Focus on your cheapest acquisition source

3. Increase customer value

Higher price, bigger plans, upsells
Same CAC, more revenue = better LTV:CAC ratio

4. Change go-to-market

Self-serve instead of sales-driven (cheaper acquisition)
Partnerships instead of direct sales (shared cost)
Product-led growth instead of marketing-led

5. Target different customers

Smaller customers are cheaper to acquire
But they might have lower LTV
The math needs to work: Lower CAC + Lower LTV can still be profitable if ratio is good

The Takeaway

Your CAC is probably higher than you think.

Stop using Method 1 (ad spend only) for strategic decisions. Use Method 4 (fully-loaded with sales) at minimum.

Segment by cohort (don’t mix enterprise and SMB). Account for seasonality (Q4 CAC ≠ average CAC).

Focus on CAC payback period and LTV:CAC ratio, not just the absolute CAC number.

We help you calculate your true CAC and build it into your unit economics so you know whether your growth is actually sustainable.