What is CAC (Customer Acquisition Cost)? Formula and Strategies to Scale Without Losing Profitability

Customer Acquisition Cost (CAC) is the average value that a company invests to acquire a new customer. This indicator includes all the costs associated with the procurement process: from marketing campaigns and salaries of the sales team, to the technological tools used. Measuring it accurately allows us to understand how much it really costs to grow.

In this way, the CAC is, in addition to a financial metric, a key strategic indicator for any startup that aspires to scale without compromising its profitability.

CAC is much more than a metric. It is a key strategic indicator for any startup that aspires to scale without compromising its profitability.

An uncontrolled CAC can put the entire business model in check. But when it is understood and optimized, it becomes a lever for sustainable growth. In this article, we explore how to calculate it correctly, what mistakes to avoid, and what strategies to apply to reduce it without cutting investment.

CAC Formula: How to Calculate It Correctly

Correctly calculating CAC is the first step in making informed decisions about scalability.

The basic formula is simple:

CAC = Total Invested in Marketing and Sales / Number of New Customers Acquired

But its usefulness depends on how accurately the data is collected. To obtain a reliable result, it is essential to include all the costs associated with the acquisition process, beyond paid campaigns.

Among the elements that must be considered are:

• Sales and marketing team costs, including salaries, commissions, and training.
• Technological tools used to capture and manage leads (CRM, automation, analytics).
• Production of content aimed at attracting and converting customers.
• Participation in fairs, events or sponsorships, as long as they generate qualified leads.

Incomplete accounting can lead to underestimating CAC and scaling an unsustainable business model.

Practical example: A startup invests 60,000 euros in marketing and sales during a quarter. That investment includes campaigns, team salaries, tools, and content. In that period, it gets 600 new customers.

CAC = €60,000 / 600 = €100 per customer

This data is only valuable when compared to the average revenue and duration of each customer. That’s where LTV[a1] comes into play, which we’ll see later.

CAC vs CPA: Key Differences Affecting Your Strategy

Although often used interchangeably, Customer Acquisition Cost (CAC) and Cost Per Acquisition (CPA) are not the same thing.

CPA refers to the cost associated with achieving a specific action: a click, a download, a registration. It’s useful for specific campaigns, but it doesn’t offer a complete view of the financial impact of capturing real customers.

The CAC, on the other hand, measures how much it costs to convert a person into a paying customer. It includes all the resources invested until the sale is closed and is the key indicator to evaluate the economic viability of a startup.

Confusing the two can lead to miscalculations and wrong investment decisions. A low CPA doesn’t guarantee a profitable CAC if leads don’t convert into customers.

CAC vs LTV: The Pair That Defines Your Business’s Health

Understanding CAC is a must. But interpreting it without context can lead to wrong decisions. To assess whether a business model is profitable, it must be compared to LTV (Lifetime Value).

LTV represents the revenue that a customer generates throughout their entire relationship with the company. That is, not just your first purchase, but everything you pay for while you’re still a customer.

The basic rule for a sustainable business is clear:

LTV ≥ 3 × CAC

What does this mean? That for every euro you invest in attracting a customer, that customer should leave you at least three euros of net income. This ratio guarantees sufficient margin to cover operating costs, reinvestment and profitability.

When CAC approaches or exceeds LTV, the model becomes unsustainable: you’re investing more in acquiring customers than those customers generate.

Measuring and optimizing this relationship is key to knowing when to scale, when to adjust prices, or when to improve retention.

What is a reasonable CAC? It depends on the sector

There is no single value of CAC applicable to all business models. What may be considered a reasonable acquisition cost in one sector would be unfeasible in another. It all depends on the margins, the average ticket and, above all, the expected LTV.

Let’s look at some examples according to the type of company, with references to the Spanish ecosystem:

• B2B SaaS: They tend to have high CACs, as they require specialized sales teams and lengthy sales processes. However, the return pays off thanks to recurring revenue and customer expansion.
  Example: Holded, a management platform for SMEs, has invested steadily in inbound marketing and partnerships. Its CAC is high, but its subscription and retention model by features balances it out.
• eCommerce: You need to keep CACs tight to be profitable. Here, loyalty and repeat purchases are key.
  Example: Freshly Cosmetics has optimized its CAC with a strong branding strategy, social media content, and community activation. This has allowed it to grow without relying exclusively on investment in paid media.
• Fintech / Healthtech: these are sectors with high barriers to entry, where CAC is high due to the need to generate trust and comply with regulations.
  Example: Bnext, a Spanish neobank, opted for an aggressive acquisition strategy in its early days. Although the CAC was high, the idea was to scale fast to maximize LTV through added financial products.
  In health, MediQuo, an online medical consultation app, combines paid media with corporate agreements to control its CAC, relying on the recurrence of use to increase the value per customer.

These cases show that the key is not in how much it costs to acquire a customer, but in how much value it leaves over time. Optimizing CAC requires a good understanding of this balance.

How to reduce your CAC without reducing investment

Optimizing CAC doesn’t mean spending less, but spending better. The key is to increase the efficiency of the procurement process so that every euro invested generates more value. Here are some strategies that can be applied at different stages of the funnel:

1. More Accurate Segmentation

Targeting the right audience reduces your cost per conversion. Adjusting the ideal customer profile (ICP) and focusing resources on those who are most likely to convert and retain directly impacts the CAC.

Example: startups such as Shakers have fine-tuned their segmentation to attract high-value freelance profiles, which allows companies to offer a more premium service and better justify the investment.

2. Automating the procurement process

The implementation of marketing and sales automation tools (CRM, lead scoring, intelligent email marketing) improves conversion and reduces the operational cost per customer acquired.

Example: Factorial, HR SaaS HR, uses automated flows to qualify leads and trigger relevant content based on their stage in the funnel. This allows them to scale without linearly increasing the sales team.

3. Content Marketing

Creating useful content that is well positioned in search engines generates quality organic traffic in the medium term. It is an investment with a progressive return, which reduces dependence on paid media and improves brand authority.

Example: Docplanner (Doctoralia) has consolidated its SEO positioning with content aimed at patients and healthcare professionals, which reduces its CAC in new markets.

4. Improve retention and recurrence

A satisfied customer not only stays longer, but recommends. This reduces CAC indirectly, thanks to word of mouth and referral.

Example: Goin, a savings and investment app, has activated a referral system that incentivizes current users to attract new customers, with a much lower acquisition cost than traditional paid media.

5. Team building

Marketing and sales teams trained in metrics, automation, and growth processes can multiply the impact of each action.
Foundation programs such as Akademia Future Builders and InspiraTech help young teams understand these metrics and implement effective strategies from an early stage.

Final keys: climbing wisely

Scaling robustly requires focus, data, and consistency. There are principles that help build a profitable foundation from the start:

• Monitor CAC constantly. It’s a living metric. It changes with every channel, every campaign, and every phase of the business. Reviewing it frequently allows you to adjust your strategy in time.
• Always evaluate its relationship with LTV. The value of a customer in the long term is the best indicator to know how much it makes sense to invest in attracting them. This balance is essential to scaling sustainably.
• Optimize before growing in volume. More customers does not automatically mean more profitability. Scaling efficiently means attracting the right profiles, with an investment proportional to the value they generate.
• Put the hold in the center. A customer who stays and recommends multiplies the return. Loyalty reduces the pressure on acquisition and reinforces organic growth.

The CAC is a strategic tool. Understanding it well and managing it judiciously allows us to build solid businesses, prepared to scale with impact and profitability.

[a1]link to the article on ARR