Average Customer Acquisition Cost SaaS

Average Customer Acquisition Cost (CAC) in SaaS refers to the average amount of money a company spends to acquire a new customer. This metric is calculated by dividing the total sales and marketing expenses over a specific period by the number of new customers acquired during that same period.

Understanding and optimizing CAC is crucial for SaaS companies to ensure sustainable growth. A high CAC relative to the customer lifetime value (LTV) may indicate inefficient marketing and sales processes or a misalignment between the product and its target market. SaaS businesses often strive to lower their CAC through strategies such as improving product-led growth, refining target audience segmentation, and enhancing marketing and sales efficiency.