MetricsSaaS

Customer Acquisition Cost (CAC)

The total cost of acquiring a new customer, including marketing and sales spend.

CAC is calculated by dividing total sales and marketing spend in a period by the number of new customers acquired. A healthy CAC:LTV ratio for B2B SaaS is typically 1:3 or better — meaning you recover the acquisition cost within a reasonable payback period. PMMs influence CAC by improving conversion rates at the top and middle of the funnel, reducing sales cycle length through better enablement, and increasing qualified traffic through organic and brand channels.

Related terms

Customer Lifetime Value (LTV)

The total revenue a company can expect from a single customer account over the life of the relationship.

Annual Recurring Revenue (ARR)

The predictable, recurring revenue a SaaS business earns annually from active subscriptions.

Product-Market Fit (PMF)

The degree to which a product satisfies a strong market demand — the point where growth becomes pull-based rather than push-based.

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