Customer Acquisition Cost (CAC): Definition, Meaning & Guide for Indian Businesses

CAC is the total sales and marketing spend divided by the number of new paying customers acquired in the same period. It is the single most important SaaS unit-economics number.

What is Customer Acquisition Cost (CAC)?

CAC = (sales spend + marketing spend) ÷ new paying customers. Include salaries, ad spend, lead-source fees (IndiaMART, JustDial), software costs and overheads. For Indian B2B SaaS, healthy CAC is anywhere from ₹5,000 to ₹50,000 per customer depending on price point. The corresponding rule: CAC must be less than 1/3 of LTV (Lifetime Value), or you are losing money on every customer. Track CAC by channel — IndiaMART CAC, organic SEO CAC, referral CAC — and double down on channels with the lowest CAC and highest retention.