Saas CAC: how to calculate it

SaaS companies have some unique metrics in their business model that are useful to evaluate the level of performance that the company is currently having, but today we come to talk with one that is common with other business models, how the CAC, but we will analyze its particularities. The CAC is one of the essential metrics for any SaaS company and knowing all its details is a key requirement.

In this article we will tell you everything you need to know to calculate the SaaS CAC, what it is and why it is so important.

What is the CAC in a Saas?

The CAC metric stands for Customer Acquisition Cost, which can be translated as the cost of customer acquisition. As the name suggests, it is an indicator that quantifies how much it costs the business to acquire a new customer.

It is a very important metric as it is a true reflection of how much money the business spends in order to acquire a customer. Of course, this includes the costs of sales, advertising, salaries and anything else that might impact the process of acquiring a customer.

How to calculate the SaaS CAC?

The calculation of this metric is not too complicated, the important thing is to understand the implications of this figure and to use the input data correctly with the intention of having a result as close to reality as possible.

Generally speaking, dividing sales and advertising expenses by the total number of new customers during a period gives the CAC.

But there are different ways to calculate it including all expenses corresponding to the sales force and marketing campaigns.

Different ways to calculate the CAC SaaS

The cost of customer acquisition can be calculated in different ways. Let’s take a look at it below:

  • Cac with marketing campaigns only: In particular, it is advisable not to include personnel costs during the calculation in the initial stages of the business or company, as they can generate a significant distortion due to not capturing a large number of customers.
  • Sales Cac calculation: Calculate the cac taking into account only the sales team.
  • Cac Blended: To calculate the Cac Blended, we quantify all the expenses related to sales: Marketing Team + Sales Team + Campaign Costs / Number of Customers.
    In addition, it is also recommended to calculate the cost of capturing leads and users, in order to know the costs during each stage of the process.

Lead acquisition cost

A lead is understood as a person or company that has shown interest in the services or products you offer. In particular, for the marketing team, a lead is a user who has given information to the company to be part of your database and be targeted for interaction.

In many cases, a lead is obtained through a transaction where the user gives you their data and permission to interact, while you offer them specialized content, a catalog, discounts or any other special benefit.

So, it is convenient to know the cost of lead acquisition to understand how much the company is investing in potential customers. The calculation is obtained by dividing the investment in marketing or sales by the total number of leads acquired during that period.

We must take into account all the acquisition actions we do: Content, Ads, Lead magnets, events….

User acquisition cost

An user is a person or company that is already using your products or services. They usually have to pay for it, but they may be benefiting from a free trial or using a fremium product.

In that sense, knowing the cost of user acquisition is a good way to measure the money the company spends on attracting new users and offers a clearer perspective on the health of the business. The big difference between users and customers, in the context being handled, is that users are considered to be individuals or companies that are registering for the service for the first time, while customers are users who have signed up for a plan and are then referred to as clients.

The calculation of the user acquisition cost is achieved by dividing the investment in marketing or sales by the number of new users within a period of time.

CAC Payback

Cac Payback is a very important indicator in a SaaS, Cac Payback refers to the time the company needs to recover the cost of acquiring that customer. It tells us what period of time a customer has to keep paying to become profitable.

Why CAC is important?

The Cac is a key indicator on which the viability of the business will depend. A CAC greater than our LIfetime Value indicates that we will not achieve a positive net return from our acquisition strategy, but we will go into this in more detail in another article.

Tools for calculating CAC in a Saas.

Throughout this article we have seen the different Cac analysis and how to calculate it, but if you want to connect your different data sources and calculate it automatically, we leave you this free trial of our tool:

https://nextscenario.com/saas-analytics-tool/