What Is CAC? Customer Acquisition Cost Formula for SaaS

You pay for every customer you win. Most advice on lowering that bill says to spend smarter. I want to make a different point: you already pay to put your company in front of a lot of people, and most of them leave without you ever learning their name.

I'm Sunny, the founder of DemoSix, so I have a stake in this. The formula and the benchmark below come from other people's pages, linked so you can check them yourself.

Customer acquisition cost for SaaS, in one sentence

Customer acquisition cost (CAC) is the average amount you spend on sales and marketing to win one new paying customer.

"Paying" matters. Stripe's guide to CAC says to count only customers who converted to a paid plan, and to leave out free sign-ups and marketing qualified leads until they pay. A lead is not a customer yet. It is the thing you hope becomes one.

The CAC formula

The formula is one line:

CAC = total sales and marketing costs ÷ number of new customers, over the same period

The division is easy. The hard part is what goes into the top. Stripe's list of what to count:

• Ads and sponsorships, events and webinars
• Content production: writers, design, video, SEO
• Salaries and commissions for your sales and marketing people
• Acquisition tools: CRM, email automation, analytics
• Agencies or contractors who work on leads or campaigns

Stripe says to leave out customer support, infrastructure and R&D. HubSpot's CAC guide for startups adds a mistake founders make: leaving out their own time spent selling, and part of the CRM, which makes CAC look smaller than it is.

Here is an example. The numbers are made up, to show the arithmetic. In one quarter you spend $12,000 on ads, $30,000 on the salaries and commissions of the people who sell and market, and $3,000 on tools. That is $45,000. You win 15 new paying customers.

CAC = $45,000 ÷ 15 = $3,000.

Pick a period and keep it. HubSpot's guide says most teams calculate CAC quarterly. Stripe points out that spending in one quarter can produce customers in the next, because sales cycles can run for months, so line the costs up with the customers they won.

A CAC benchmark, and why one number misleads

People want to know what a good CAC is. The best published answer I found measures it a little differently from the formula above. Benchmarkit's 2025 SaaS performance report calls it the New CAC Ratio: total sales and marketing expense divided by new customer ARR. Its finding is that the ratio rose 14% in 2024 to a median of $2.00 of sales and marketing spend to win $1.00 of new customer ARR.

In plain words: for the median company in that report, a customer who pays $1,200 a year cost about $2,400 to win. (That conversion is my arithmetic, not the report's.)

Two cautions, both from the sources themselves. Benchmarkit says the ratio should be read against annual contract value. And Stripe says there is no universal CAC benchmark across SaaS, only that B2B tends to run much higher than B2C. So use the benchmark as a sanity check. Your real benchmark is your own number last quarter, split by where the customers came from.

Stripe adds the pairing to keep in mind: SaaS businesses generally aim for $3 of lifetime value for every $1 of CAC.

How to reduce CAC in SaaS: two levers

CAC is a fraction. You can shrink the top or grow the bottom.

Nearly every guide on this topic works on the top: cut wasted spend, target better, build referrals, write content, keep customers longer. All good. But look at how the FAQ in HubSpot's guide to reducing CAC answers "How do I get CAC down?": it ends on driving "more customers from the same traffic volume."

That is the bottom of the fraction, and it is where I think SaaS teams leave the most on the table. You have already paid for the traffic. The ad was bought. The email went out. The rep wrote the LinkedIn message. What happens to the person who looks, likes what they see, and isn't ready to book a call today?

Usually, nothing. Unbounce's SaaS benchmark puts the median conversion rate for SaaS landing pages at 3.8%. Unbounce counts whatever goal the page has, not only demo requests, so don't read it as a demo-request rate. Still, it shows the shape of it: most visitors leave without doing the thing. And you never learn who they were.

Put a Watch a Demo link in every place you already pay to reach people

This is what Capture Leads is for. "Book a demo" is a big ask, and most people quietly say no. A Watch a Demo link is a smaller one. They click, enter their name and email on a page with your branding, and the demo plays. They don't need an account. You see who watched which demo and how far they got.

That turns a visit you paid for into a name and an email in your pipeline. The cost of the visit doesn't change. The number of customers it can produce does. So CAC falls, without a dollar more of media spend.

Here is where it goes:

• Your email signature. Every email your team sends carries it, to the people who never reply too. Put it beside "Book a demo." I wrote how-tos for each mail client: the SaaS email signature guide, Outlook and Gmail.
• Your website and landing pages. One short form stands between the visitor and your demos. For a SaaS company the offer is the product itself. More on that in the landing page post.
• Your ads. The same link works in Facebook, Instagram and Google ads, and every lead from an ad reads "Ad" under Came in from. Meta's own form is fewer clicks, so I compared the two honestly.
• LinkedIn and cold email. Put the link in the message, next to the meeting ask. Proposals and direct messages work the same way. Unbounce's SaaS data has email as the best-converting traffic source, at a median 16.9%, so this is a good place to give people a second, easier answer than "book a call."

Give each place its own link and you can tell where a lead came from. A link is a Capture Leads link with its own name, form and demos. A rep is a person with their own copy of a link, so you can tell who brought a lead in. Capture Leads is on every plan:

• Basic is free: 1 link, just the owner, 50 new leads a month.
• Standard: 5 links, 10 reps, unlimited leads.
• Teams: 10 links, 50 reps, unlimited leads.
• Enterprise: no limit on links or reps.

Five places, five links on Standard. On Basic, start with the one place that reaches the most people. The pricing page has the current prices.

What it does to the CAC formula

Take the made-up quarter again: $45,000 in costs, 15 customers, a CAC of $3,000.

Say the links catch names that turn into 3 more customers over the following months. The costs are the same. CAC = $45,000 ÷ 18 = $2,500, about 17% lower. That is the arithmetic, not a promise. How many names become customers depends on your visitors, your demos and your follow-up.

If you pay for a plan, it joins the tools line in the top of the fraction. Count it.

There is a second gain. The Leads list shows where each lead came in from, and which link it came through. Export the list to CSV, or sync it to HubSpot or GoHighLevel on Standard and Teams, and match it against who became a customer. Now you can work out CAC by place: signature, ads, website, LinkedIn. Both Stripe and HubSpot recommend splitting CAC this way, because the overall number hides what is working.

And you see how far each person watched. A lead who watched most of a demo is not the same call as one who never pressed play, and your reps can spend their time accordingly. That trims the sales cost in the top of the fraction too.

What a Watch a Demo link does not do

• It does not create traffic. If nobody sees your signature, ad or message, there is nobody to capture.
• It asks for a name and email before the demo. A form in front of a demo will cost you some viewers. The trade is a name for the ones who stay.
• It does not close the deal. CAC only moves when a captured name becomes a customer. The follow-up is yours.
• It is not your CRM or your ad platform. It feeds them.

The takeaway

CAC is what you spend to win a customer, divided by how many you win. Everyone tells you to shrink the cost. Check the other half too. List every place you already pay to reach people, put a Watch a Demo link in each one, and give each its own link. Then work out CAC again next quarter, place by place, and see which ones turned attention into customers.