How CAC is calculated
The simplest form is spend ÷ new customers. If you spent $20,000 on a channel last month and it produced 10 customers, paid CAC is $2,000. Blended CAC widens the numerator to include everything it took to acquire them: ad spend, software, agency or salary cost, and creative.
Why it is the metric that decides a channel
CAC only means something next to two other numbers: customer lifetime value and payback period. A healthy B2B benchmark is an LTV:CAC ratio of roughly 3:1, with CAC paid back inside 12 months. A channel with a low cost per lead but a punishing CAC is not cheap, it is expensive in disguise.
We treat CAC as a pipeline question, not a lead question. A campaign that floods the funnel with cheap, non-ICP leads can look efficient on cost per lead while quietly tripling the true cost to acquire a customer who actually closes. Forty Forty is a worked example: 66% lower CAC and 3x revenue growth in 90 days. It is downstream of your conversion rate too: a rate that looks strong on low volume can hide a CAC that never actually materialized. On Meta, note that a bid cap does not control CAC; a cost cap is the strategy that targets it.
Common questions
How do you calculate customer acquisition cost?
Divide the total sales and marketing spend over a period by the number of new customers acquired in the same period. Use paid spend only for paid CAC, or add tooling and team cost for a blended CAC.
What is a good CAC?
There is no universal number; CAC is only healthy relative to lifetime value. A common B2B target is an LTV:CAC ratio around 3:1 with the cost recovered within 12 months.