Customer acquisition cost (CAC) explained — and how to lower it
CAC is total sales + marketing spend divided by new customers acquired. Lower it by improving conversion, consolidating tools, and using channels with no per-seat tax. Here's the formula and the levers.
Short answer: customer acquisition cost (CAC) = total sales + marketing spend ÷ number of new customers in a period. A healthy SaaS CAC is recovered (payback) in under ~12 months and sits well below customer lifetime value (LTV:CAC of 3:1+). You lower CAC by improving conversion, consolidating your tool stack, and using channels that don't tax you per seat or per credit.
The formula
> CAC = (sales spend + marketing spend) ÷ new customers acquired
Include tooling, ad spend, and rep salaries for the period.
Levers to lower CAC
- Improve conversion — better targeting + multichannel sequences lift reply→meeting→close.
- Consolidate tools — five subscriptions become one; per-seat fees vanish.
- Self-serve — let buyers sign up + pay without a sales call.
- Own organic — SEO/content compounds and lowers paid dependence.
A free-forever CRM with all channels built in directly cuts the "tooling" half of CAC.
> Start free — cut tooling cost and lift conversion in one platform.