Last Updated: March 2025
The average customer acquisition cost (CAC) in SaaS can significantly impact a company’s profitability and growth. In fact, a study revealed that the average CAC for SaaS businesses has increased by over 55% in the last five years. As competition grows fiercer, understanding and optimizing CAC becomes essential for maintaining sustainable growth.
This article explores the factors that influence the average customer acquisition cost in SaaS, along with actionable strategies to improve it, ensuring your business remains competitive in a rapidly evolving market.
Table of Contents
What is Customer Acquisition Cost (CAC)
How to Calculate Customer Acquisition Cost SaaS
What is a Good Customer Acquisition Cost (CAC)
Average Customer Acquisition Cost (CAC) in SaaS Business
What are The Factors Influencing CAC?
How to Lower The CAC in Your SaaS Business
Saufter.io The Best AI-Powered Chatbot Platform to Enhance Customer Engagement
What is Customer Acquisition Cost (CAC)
In simple words, the cost of CAC is simply how much resources and costs or what you are spending for getting an extra customer. Alongside Customer Lifetime Value (LTV), this is also a crucial metric that businesses evaluate to see how much value every new customer creates for your business on paper, considering acquisition efforts.
How to Calculate Customer Acquisition Cost SaaS
The CAC is calculated by dividing the total marketing and sales expenses for a period (a month, quarter, or year) by the number of customers acquired during that time. The simplicity of this basic formula makes it an ideal tool for quickly and easily assessing the productivity that your marketing and sales efforts are producing. That is beneficial to any small business or startup with uncomplicated cost structures.
What formula is used to determine a company’s customer acquisition cost
For instance, suppose you spend $15,000 on marketing and sales in September to acquire 150 new customers for your SaaS company then the cost of acquiring a customer is $100 which is ($15000/100).
What is a Good Customer Acquisition Cost (CAC)
Now a Customer Acquisition Cost (CAC) at $50 might be something positive in one sector, but it could figure as too high or not very competitive depending on the industrial averages.
It’s important for you to Compare your CAC with the Customer Lifetime Value (LTV). It will show you the ratio of CAC: cost of the purchase of a new client with LTV: all money that a customer will generate throughout their time with your business.
What is a Good LTV to CAC Ratio
The standard answer is to have your CAC closer at 1/3 compared to the LTV. CAC ideally should be 1/3 or 1/4 of LTV which translates to a LTV CAC ratio of between three and four.
This makes sure that the revenue extracted from each customer is much more than what you pay to acquire him.
Average Customer Acquisition Cost(CAC) in SaaS Business
CAC stands for Customer Acquisition Cost. This is the full amount it costs you to draw a fresh customer. The unit of measure for this metric will vary greatly depending on the industry, company size, and specialization area within an industry.
To illustrate, a study found that the average CAC of a small B2B SaaS financial firm stands at $1,450, but it shoots to $14,772 when scaled up to enterprise size. Similarly. CAC for smaller B2B SaaS healthcare companies normally costs around $921, while it costs an average of $11,021 to acquire a customer in a large enterprise.
These numbers show the way industry and size can influence acquisition costs, and further underscore how you have to really figure out a viable approach towards it at the specific level of business.
By learning more about these industry averages and how they change with different types of businesses, you can better measure the cost efficiency of your own CAC while identifying potential areas for improvement.
Understanding that in a vacuum is helpful but also understanding the industry benchmarks and how your CAC translates given certain features of your business will help empower decision-making.
What are The Factors Influencing CAC?
There are many factors that influence the cost of getting a new client for your SaaS business. Some of the key factors include:
- Sales Cycle Duration: When the sales cycle is longer, more time and resources (follow-up calls, demos) are invested into converting that customer. This in turn drives up the CAC. Converting leads faster can reduce those costs.
- Value of Purchase: If you are selling high-ticket items, paying a higher CAC may make sense as the ROI will still be on the larger side. However, high CAC translates to smaller profits for low ticket sales.
- Customer Lifetime Value (CLV): The longer a customer stays with your business, the more revenue they will produce and in turn offset that initial acquisition cost. In this way, businesses can balance CAC by increasing CLV.
- Purchase Frequency: If you have a lot of repeat buying customers, the customer lifetime value will be higher, because you would no longer need to keep marketing for new clients. Hence, a decrease in CAC in the long run.
How to Lower the CAC in Your SaaS Business
SaaS industry customers are controlled by their purchase cost, and you should always manage with the ability to pay it off. We will go over some of the strategies that work for businesses to lower the CAC and get a better ROI.
Streamlining The Sales Process
By making your sales process more efficient, you can significantly reduce your Customer Acquisition Cost (CAC ) by shortening the time to close and increasing conversion rates. Here’s how:
- CRM Software: A robust customer management software will not only help you track your leads but also provide all the necessary assistance like automated follow-ups, ensuring that every lead is attended to meticulously & in good time so no opportunity misses out.
- Sales Training: Provide regular sales training to your sales staff on the latest best practices and updated resources. So that, they can perform better and bring efficiency in their jobs.
- Lead Scoring: Use lead scoring to identify and prioritize high-value leads, so that, your team can filter leads based on the potential of conversion.
Optimizing The Digital Marketing Channels With The Help of AI
One of the best ways to optimize your digital marketing channels is by using artificial intelligence (AI). AI tools allow you to analyze huge amounts of data to determine which marketing method can produce the best result for the cheapest cost.
- AI-Powered Analytics: Use AI engines to analyze and track customer behavior across different marketing channels. This will highlight the channels that are working best for your business to acquire new customers.
- Personalized Marketing: AI can help you to create highly personalized and targeted campaigns that are designed keeping your target audience in mind. It improves the conversion rate, along with reducing the cost of acquisition.
- Automated Ad Bidding: With AI, your ad spending can also be optimized; they tweak their bids with every data point guaranteeing maximum ROI.
Enhancing The Customer Onboarding and Retention Process
Onboarding and retention strategies reduce Customer Acquisition Costs (CAC) by ensuring that the highest possible customer value is derived from a conversion while minimizing churn.
Let me show you how:
- Onboarding Process: Must have an intuitive design and playful onboarding experience to help your new customers understand your product within minutes. You can make them get started with tutorials, webinars, or personal help
- Customer Support: Provide quality customer service that resolves issues quickly to maximize the satisfaction level of the customer. A satisfied customer is more likely to return, and they may bring you new customers as well.
- Loyalty Programs: Implement loyalty programs to compensate your long-term users. Either in the form of incentives or by providing them with some more personalization.
Leverage The Power of Email Automation
For both customer acquisition and retention, email marketing is one of the most effective tools available. Here is what should you do to get the maximum result out of email campaigns::
- Automated Email Campaigns: Use automation to send personalized emails based on a customer’s stage in the buying process, as well as welcome messages, and announcements.
- Segmentation: Use Customer segmentation to group your email list based on their behavior and preference, so that each segment of your contact receives targeted content suited for them.
- A/B Testing: Try out different subject lines, content, and layouts to discover what works best for enhancing open rates and conversion.
Add Saufter.io to supercharge your email campaigns, an AI-powered platform for email marketing that lets you tailor super-relevant messages that allow you to engage with your audience much better.
Implementing a Comprehensive Referral and Affiliate Program
Referral and affiliate programs are some of the most effective ways to get new customers at low costs. Here’s how they can help:
- Referral Programs: Offer incentives like discounts, free months, or exclusive rewards to encourage your existing customers to refer others. It helps you to build trust and gain organic followers.
- Affiliate Programs: Partner with affiliates who promote your product to their network in exchange for commissions on sales that they bring. Utilizing this tactic, it is possible to scale your operation without spending an arm and a leg upfront.
This will help you to lower your Customer Acquisition Cost (CAC) and also will bring cost-efficient growth for your SaaS business.
Saufter.io The Best AI-Powered Chatbot Platform to Enhance Customer Engagement
Saufter.io is an AI-powered chatbot platform designed to enhance customer engagement on websites. It offers advanced conversational AI tools that enable businesses to automate customer support, respond to inquiries in real time, and improve user experience.
The platform focuses on simplifying communication, reducing response times, and optimizing lead generation and conversion rates through personalized interactions. Saufter provides seamless integration with various channels, making it ideal for businesses looking to streamline customer support and drive sales through AI automation.
Conclusion
In conclusion, understanding and managing your customer acquisition cost (CAC) is crucial for the success of any SaaS company. On average, the CAC for SaaS businesses can range from $200 to over $2,000, depending on the complexity of the product and target market.
To improve this, companies need to focus on optimizing marketing spend, improving customer retention, and leveraging automation tools like Saufter. By streamlining onboarding and enhancing customer experiences, platforms like Saufter can help reduce the overall CAC while driving sustainable growth.
