In startups and SaaS ventures, tracking customer acquisition costs (CAC) isn’t only helpful, but essential. It’s important to know how much you spend to acquire a new customer, which also helps to determine the sustainability of your business model. Therefore, the CAC calculator is a simple tool that helps businesses make smarter, data-driven decisions.
What is CAC (Customer Acquisition Cost)?
Customer Acquisition Cost (CAC) is the total cost of acquiring a new customer. This includes marketing spend, advertising, sales team salaries, and software tools used in the acquisition process.
The formula is:
Total Sales and Marketing Costs / No. of New Customers Acquired
For Example: If you spend 10,000 on marketing and sales in a month and acquire 100 new customers, your CAC is: 10,000/100 = 100 per customer.
What is a CAC Calculator?
A CAC calculator is a digital tool found in spreadsheet, software app, or web-based calculator, that performs this calculation for you. It simplifies the process, helping founders, marketers, and finance teams input their expenses and get CAC.
Inputs Include:
- No. of new customers in the same period
- Tools and software costs
- Salaries of sales and marketing team
- Advertising spend
- Content production
Why is CAC important?
Keeping track of CAC answers crucial business questions:
- Is my sales team operating efficiently?
- Can I grow my business sustainably?
- Are my marketing campaigns profitable?
- How long will it take to recover the cost of acquiring a new customer?
A low CAC in comparison to your customer’s lifetime value (LTV) indicates a healthy business model. A standard principle would be to keep your LTV:CAC ratio at least 3:1.
How to reduce CAC?
- Use referral programs: Let existing happy customers bring in new ones.
- Enhance targeting: Smart ads lead to higher conversion rates.
- Optimise conversion funnels: A seamless onboarding and checkout process increases customer acquisition.
- Automate tasks: Save time and money by automating repetitive and tedious tasks.
Where to find a CAC calculator?
You can find free CAC calculator on:
- Google Sheets and Excel
- Hubspot, Shopify, or other marketing tools
- Custom SaaS finance platforms like Baremetrics, ChartMogul, or ProfitWell
Conclusion
CAC Calculator isn’t just a simple tool, but it’s the gateway to your business financial health. Knowing your CAC can help you make smarter marketing decisions, set realistic targets, and increase profits over time.