Why Most CAC Calculations Are Wrong (And What to Measure Instead)

If you’re calculating Customer Acquisition Cost (CAC) by dividing ad spend by new customers… congrats, you’re doing what 90% of marketers do. And also, sorry, because you’re probably getting it wrong.

In B2B, especially in SaaS digital marketing, CAC is less of a static number and more of a moving target. The kind that shifts with your funnel, attribution model, sales cycle, and internal reporting.

This post unpacks what most people miss, how to calculate customer acquisition cost properly, and most importantly what to measure instead if you want a truer picture of what it’s costing you to grow.

What Is Customer Acquisition Cost (CAC), Really?

CAC is the total cost of acquiring a customer, including:

• Paid media spend
• Sales and marketing salaries
• Tools and software
• Creative production
• Agency/contractor costs
• Onboarding costs (if they're tied to acquisition)

The classic formula:

CAC = Total Sales + Marketing Cost ÷ Number of New Customers

Useful, right? Kind of.

Because if you don’t define those inputs clearly, and contextualise them with your sales model, you’ll end up with a CAC number that’s either dangerously low (because it ignores human costs) or wildly inflated (because it includes budgets tied to brand, not acquisition).

Why Most CAC Calculations Are Off

Let’s look at a few common ways CAC gets miscalculated in B2B and SaaS:

1. Only Counting Paid Media

Paid ads are part of the story. But your CAC is only accurate if you include:

• Organic and content efforts (and their cost)
• SDR outreach (time and tools)
• Sales resource time per lead

Miss those, and you're comparing apples to a very incomplete fruit basket.

2. Ignoring Conversion Lag

In B2B ppc, leads don't convert overnight. If your sales cycle is 90 days but you’re measuring CAC month-on-month, you’re seeing spend now but results later.

This leads to a false spike in CAC, followed by under-attributed return.

📌 Pro tip: Align CAC calculations to average sales cycle length (e.g. use cohort analysis or time-lag reports in Looker Studio)

3. Lumping All Marketing Into “Acquisition”

Not all marketing is acquisition marketing.

Brand campaigns, retention emails, even some product content may support growth, but they shouldn’t always be counted in your CAC unless they directly impact new customer acquisition.

📌 Fix: Tag budgets clearly (acquisition, retention, brand) in your reporting structure.

4. Treating CAC as a Static Number

CAC varies by:

• Channel
• Campaign
• ICP segment
• Product line
• Region

Yet many businesses report one global CAC number and treat it like gospel.

📌 Fix: Break CAC down by source and segment. You’ll quickly find where efficiency lives.

How to Calculate Cost of Customer Acquisition Properly

Here’s a more rigorous way to approach it, especially if you're a SaaS or B2B business:

1. Define a clear reporting window

Use a time frame that matches your sales cycle (e.g. 90-day rolling)

2. Tally all acquisition-related costs

Include ad spend, marketing team salaries, sales time per customer, agency fees, tools, and onboarding

3. Filter for net new customers only

No upsells, reactivations, or expansions

4. Segment by source

Calculate CAC separately for Paid Search, LinkedIn Ads, Outbound, Organic, etc.

5. Contextualise with payback

Track how long it takes to recoup CAC from each channel/customer cohort

Smarter Metrics to Pair With CAC

A standalone CAC number is like knowing your car’s fuel consumption without knowing how far you’ve driven.

To really understand performance, pair CAC with:

✅ CAC Payback Period

How long does it take to recover the cost of acquiring a customer? Shorter = healthier.

✅ LTV:CAC Ratio

Are you making at least 3x what you spend to acquire each customer? If not, you’re scaling unprofitably.

✅ CAC by ICP Fit

Not all leads are created equal. If some cost more but convert better and retain longer, your CAC tolerance should flex.

So, What Should You Be Measuring?

Beyond CAC, B2B SaaS teams should also track:

Final Thoughts

If your CAC number looks too good to be true, it probably is. And if you’re not factoring in your full customer journey, segmentation, or conversion lag… you're flying blind.

The truth? There’s no “perfect” CAC number. But there is a smarter, more honest way to measure customer acquisition—and use that insight to fuel growth.

If you're a B2B SaaS company looking to improve how you measure and reduce CAC, we’re a SaaS marketing agency that specialises in doing just that. Give us the data, and we’ll help you turn it into direction.

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