How to Calculate CAC for SaaS Companies

Introduction

Did you know that 80% of SaaS startups fail to scale profitably because they don’t fully understand their CAC? It’s a make-or-break metric.

Ever feel like you’re spending more to acquire customers than they’re worth? You’re not alone. For SaaS founders, understanding CAC isn’t just a nice-to-have—it’s the difference between scaling profitably and burning cash.

Who Is This Guide For?

What is CAC (Customer Acquisition Cost)?

Definition:

CAC is the total cost of acquiring a new customer, including marketing, sales, and related expenses.

Why CAC Matters for SaaS

• 🚀 High CAC = slower growth, more cash burn
• 📈 Low CAC = scalable, predictable revenue

The Formula for Calculating CAC

Basic CAC Formula:

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Breaking Down the Components:

• Sales & Marketing Costs: Ad spend, sales commissions, software tools (e.g., CRM, email marketing platform)
• New Customers Acquired: Only count net new customers

Example Calculation:

• A SaaS company spends $50,000 on sales & marketing in Q1
• They acquire 100 new customers
• CAC = $500 per customer

📈 Pro Tip: Don’t just calculate CAC once—track it monthly or quarterly to spot trends and adjust your strategy.

Advanced CAC Calculation: Fully Burdened CAC

Basic vs. Fully Burdened CAC

• Basic CAC: Good for early-stage startups focused on simplicity
• Fully Burdened CAC: Ideal for scaling companies that need a full picture of acquisition costs

Formula:

Fully Burdened CAC =

Downloadable Checklist: Get our Fully Burdened CAC Template to track all costs accurately.

Common Mistakes When Calculating CAC

Download the Top CAC Mistakes Checklist

• 🚨 Mistake #1: Forgetting to include all costs (e.g., software tools, salaries)
• ✅ How to Avoid It: Always track CAC over consistent time periods and include all associated costs.
• 🚨 Mistake #2: Using gross customer numbers instead of net new customers
• ✅ How to Avoid It: Only count new customers within the same time period as your costs.

How to Optimize CAC for SaaS Companies

Tactics to Lower CAC

✔️ Invest in inbound marketing (SEO, content, Google Ads)
✔️ Leverage product-led growth (freemium models, viral loops, referrals)
✔️ Shorten sales cycles with better ICP targeting

Case Study 1: Reducing CAC with Retargeting
A mid-stage SaaS company had a CAC of $800 due to expensive cold outreach.
What they did:

• Shifted 50% of ad spend to retargeting
• Focused on re-engaging warm leads
  
  💰 Results:
  
  • 25% reduction in CAC (down to $600)
  • 20% increase in conversions

Case Study 2: Improving Onboarding to Lower CAC
A freemium SaaS company had a trial-to-paid conversion rate of just 3%, leading to high CAC.

What they did:

• Added in-app tutorials & automated onboarding sequences
• Created a guided setup process

📉 Results:

• 40% improvement in trial conversion rates
• 30% lower CAC over 6 month

Quick Wins:
✔️ Improve onboarding to convert trials into paying customers faster
✔️ Refine ad targeting to avoid wasted spend
✔️ Boost referral programs to turn existing customers into free acquisition channels

CAC Benchmarks for SaaS Companies

Key Takeaways:

• Freemium models → Higher CAC due to lower conversion rates
• Enterprise SaaS → Higher CAC but stronger retention & higher LTV
• SMB SaaS → Lower CAC but higher churn

Tools and Templates for Calculating CAC

Download the CAC Calculator Template

✅ What’s Inside?
✔️ Pre-built formulas for basic & fully burdened CAC
✔️ Sections for tracking sales, marketing, and overhead costs
✔️ Auto-generated CAC payback period calculations

✅ Recommended Tools:

• Google Sheets/Excel – Simple CAC tracking
• ChartMogul, Baremetrics – SaaS-specific CAC analytics
• HubSpot, Salesforce – CRM tools with CAC tracking features

FAQs About CAC for SaaS Companies

❓ How do I calculate CAC for freemium models?

• Separate CAC for free vs. paid users (since freemium conversion rates are lower).

❓ What’s the difference between CAC and CPA?

• CAC includes all marketing & sales costs.
• CPA typically only accounts for paid ads.

❓ How often should I calculate CAC?

• Monthly or quarterly to track trends.

❓ How do I calculate CAC payback period?

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✅Example: If CAC = $500 and MRR per customer = $100, payback period = 5 months.

Conclusion

📢 Final Thought:

Understanding and optimizing your CAC isn’t just about saving money—it’s about unlocking your SaaS company’s full growth potential.