The formula
CAC = (sales costs + marketing costs in a period) / new customers won in that period
Payback months = CAC / monthly gross profit per customer
CAC is customer acquisition cost. ProductPlan and Rewardz both define it as sales and marketing costs over customers won. Andreessen Horowitz's metrics list adds the part teams skip: it should be the full cost.
As of November 2026.
How to calculate CAC
Pick a period, usually a month or a quarter. Add up what you spent to win new customers in it. Divide by the new customers you won in the same period.
Worked example, with made-up figures: 3 reps cost S$36,000 a month in pay, commission and employer CPF. They spend about 70% of their time on new business, so S$25,200 counts. Add S$6,000 of ads, S$2,000 for an event and S$800 of sales tools, and the month costs S$34,000. Over a quarter that's S$102,000. The team won 40 new customers, so CAC is S$102,000 / 40 = S$2,550.
That only means something next to what a customer brings in. At S$300 a month in gross profit, it takes S$2,550 / S$300 = 8.5 months to earn the cost back.
Fully loaded, blended and paid CAC
Same quarter, three answers. Say your made-up S$18,000 of ads brought in 15 of the 40 customers.
| Version | What it counts | Sum | CAC |
|---|---|---|---|
| Ads only | Ad spend, against every new customer | S$18,000 / 40 | S$450 |
| Paid CAC | Ad spend, against customers from ads | S$18,000 / 15 | S$1,200 |
| Fully loaded, blended | All sales and marketing costs, against every new customer | S$102,000 / 40 | S$2,550 |
Work out both. Andreessen Horowitz says paid CAC shows whether you can spend more on ads and still make money, and blended includes customers who came on their own.
The first row leaves out your reps' pay. HubSpot's Brad Coffey warns against that in David Skok's SaaS metrics guide.
If marketing's budget isn't yours, work out sales costs alone: S$75,600 / 40 = S$1,890 a customer. That's the part your team can move.
What to count in fully loaded CAC
- Pay, commission and bonuses for the time reps spend winning new customers. Time spent looking after existing customers stays out.
- Employer CPF on that pay. CPF Board sets it at 17% of wages for employees aged 55 and below on monthly wages above S$750, from 1 January 2026, and wage ceilings apply.
- Ads, events, lists, sales tools, and any agency or freelancer working on new business. Andreessen Horowitz adds referral fees, credits and discounts.
- Leave out what it costs to deliver the product. That belongs in gross profit.
- Count customers, not deals. A customer who buys twice in the quarter is one new customer.
- Allow for the lag. Let's Bloom's fix for a 60-day cycle is to divide by costs from 60 days ago. A rolling three or six months does the same job with less fuss.
- Split it by channel. Referrals, ads and cold outreach cost very different amounts, and the total hides which to grow.
What is a good CAC?
A good CAC is one you earn back well before a typical customer leaves. So work out your payback months, and hold them against how long your customers stay.
David Skok's guide says the best SaaS businesses have lifetime value above 3 times CAC. That guideline dates from 2013 and was written for SaaS, so treat it as a reference point.
| Who's looking | What they check | What good looks like |
|---|---|---|
| Owner | CAC against gross profit per customer | Payback shorter than a typical customer stays |
| Sales manager | Sales costs per new customer, by channel, each quarter | The cheapest channel growing, and the total flat or falling |
| Rep | Meetings and win rate, the parts they move | More deals from the same number of meetings |
| Marketing | Cost per lead, and the share that become customers | Cheaper leads that still turn into customers at the same rate |
What pushes CAC up, and what brings it down
CAC rises when spend grows faster than new customers. Check these first:
- Win rate slipped, so each customer takes more meetings and more rep time.
- Deals take longer, so reps carry more open deals for each one they close.
- Budget moved to a channel that brings enquiries but fewer customers.
- Time spent on existing customers is being counted as new business.
What brings it down:
- Ask every happy customer for an introduction, since an introduction needs no ad spend.
- Qualify earlier, so reps spend their meetings on buyers who can say yes.
- Give every open deal a dated next step, so fewer go quiet after a proposal.
- When you need to cut spend, start with the channel that has the highest CAC.
Work out your CAC
Put in your own costs and new customers. The boxes start with the worked example's numbers.
CAC: $2,550
- $102,000 / 40 new customers
- Payback: 8.5 months
Where it shows up in your week
Palby Sales Tracker doesn't work out CAC or any dollar figure. Costs live in your payroll and sales records. It counts the rep time behind each new customer: each call, meeting and close is one tap. Export the board to CSV and you can put those counts beside your costs.
Keep reading
Common questions
Add up your sales and marketing costs for a period, then divide by the new customers you won in it. S$102,000 and 40 customers is S$2,550.
Customer acquisition cost, or CAC. It covers everything you spent to win them, and rep pay is part of that.
One you earn back well before a typical customer leaves. Divide CAC by monthly gross profit per customer, and compare that with how long customers stay.
Yes, for the share of time spent winning new customers. Leave them out and CAC looks cheap while most of the cost sits in payroll.
No. Relevant Audience's guide puts it plainly: cost per lead divides by leads, cost per acquisition by ad conversions, and CAC divides all costs by new paying customers.
Each month on a rolling three or six months, and by channel each quarter when you set the next budget.
Sources
- Andreessen Horowitz, 16 Startup Metrics, first published 21 August 2015, updated 9 September 2024, read 2 November 2026
- David Skok, SaaS Metrics 2.0, first published 16 January 2013, updated 18 June 2026, read 2 November 2026
- CPF Board, How much CPF contributions to pay, read 2 November 2026
- ProductPlan, Customer acquisition cost, read 2 November 2026
- Rewardz, How to calculate customer acquisition cost, read 2 November 2026
- Let's Bloom, Understand, calculate and improve your CAC, read 2 November 2026
- Relevant Audience, What is CAC, read 2 November 2026