Customer Acquisition Cost (CAC): Formula, LTV Ratio, and Payback Period for Small Businesses
CAC is total sales and marketing cost divided by new customers acquired in the same period — $6,000 of spend across 30 customers is a $200 CAC. This guide covers what belongs in the numerator, how to pair CAC with gross-profit LTV (a 3:1 to 4:1 ratio is the practical small-business target) and payback period (under 12 months for SMB customers, up to 24 for enterprise), 2026 CAC ranges by business type, and seven ways to lower CAC without cutting customer volume.
