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Tip: Compare this value with your Customer Lifetime Value (CLTV) to determine profitability.
CAC is a foundational growth metric. It reveals how much you spend to gain one customer, guiding decisions in:
Formula:
CAC = Total Sales & Marketing Cost ÷ New Customers Acquired
This number becomes more powerful when paired with LTV to calculate your LTV: CAC Ratio. A healthy benchmark is 3:1—meaning your customer brings in 3× more value than they cost to acquire.
Industry | Avg. CAC (INR) |
SaaS (B2B) | ₹5,000 – ₹20,000 |
Ecommerce | ₹500 – ₹2,000 |
EdTech | ₹1,000 – ₹3,500 |
Fintech | ₹1,500 – ₹4,500 |
HealthTech | ₹1,000 – ₹4,000 |
Source: upGrowth internal benchmarks & global studies (2023–24)
Inputs:
Calculation:
CAC = ₹12,00,000 ÷ 800 = ₹1,500
Interpretation:
You are spending ₹1,500 to acquire each customer. If your CLTV is ₹4,500, your LTV:CAC ratio is 3:1, which is healthy for growth.
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Answers to Frequently Asked Questions
Customer Acquisition Cost (CAC) refers to the average expense incurred to acquire one new customer through sales and marketing efforts.
Divide your total marketing and sales expenses by the number of new customers acquired during the same period.
A “good” CAC depends on your business model and margins. Your Customer Lifetime Value (CLTV) should be three times your Customer Acquisition Cost (CAC).
Yes. Include all personnel and tools contributing to sales and marketing efforts.
Quarterly is ideal. It helps you spot trends, shifts, or overspending early.
Yes. Improving conversion rates or onboarding more qualified leads can reduce customer acquisition costs (CAC) without requiring a budget cut.
Absolutely. Compare CAC by channel (e.g., Google Ads, organic search, referrals) to reallocate the Performance marketing budget more efficiently.