The formula and what belongs in it
CAC = Total Sales and Marketing Spend / New Customers Acquired in the same period. The formula is simple. The definition of "total spend" is where teams differ, and where the number becomes misleading.Fully-loaded CAC includes every cost associated with acquiring a customer: sales rep compensation (base and variable), sales management, sales tools (CRM, engagement platforms, intelligence tools), marketing team salaries, paid media, agency and contractor fees, content production, and events. If a resource is deployed to bring in new customers, it belongs in the numerator.
Partially-loaded CAC (often just called "ad spend CAC" or "marketing spend CAC") excludes people costs and tool costs, capturing only direct media and program spend. It is faster to calculate but overstates acquisition efficiency by ignoring the cost of the humans running the programs.
Common CAC calculation variants
| CAC Type | What It Includes | When to Use |
|---|---|---|
| Fully-loaded CAC | All S&M headcount, tools, programs, overhead | Payback period, LTV:CAC, board reporting |
| Marketing-only CAC | Marketing spend + marketing team costs | Evaluating channel efficiency |
| Program CAC | Direct program spend only (ads, events, agency) | Campaign-level ROI |
| Segment CAC | Fully-loaded, split by SMB / mid-market / enterprise | Planning and resource allocation |
Why fully-loaded CAC changes payback decisions
If you calculate CAC using only media spend, payback looks shorter than it actually is. When you factor in rep salaries, management overhead, and tooling, the real cost per customer is higher, which extends payback and changes how you evaluate channel ROI and growth investments.
A company might believe it is acquiring customers efficiently based on a media-spend CAC, then discover when fully-loaded CAC is applied that payback extends well beyond the target window. That is a planning problem, not an accounting quirk.
CAC in the context of LTV and payback
CAC only makes sense relative to lifetime value and payback period. A high CAC is acceptable if LTV is high and payback is within the business's liquidity tolerance. A low CAC that produces churning customers is worse than a higher CAC on customers who expand.
Use fully-loaded CAC when calculating CAC payback period and LTV:CAC ratio. Using a partial figure for planning inputs while using a full figure for investor reporting creates internal inconsistency that eventually produces bad decisions. The denominator (new customers) should also be defined consistently: new logos only, not expansions.
Frequently Asked Questions
What is the CAC formula?
CAC = Total Sales and Marketing Spend / Number of New Customers Acquired in the same period. If you spent $500,000 on sales and marketing in a quarter and acquired 50 new customers, your CAC is $10,000. The spend and customer count must cover the same time window.
What costs should be included in CAC?
Include all direct sales costs (rep salaries, commissions, manager salaries, sales tools, travel) and all direct marketing costs (ad spend, agency fees, content production, marketing tools, events, marketing team salaries). Exclude customer success costs, which belong in retention economics, not acquisition.
What is the difference between blended CAC and new-business CAC?
Blended CAC includes all new customer spend across all channels and segments in one number. New-business CAC segments by channel, segment, or motion (inbound vs. outbound) to show where acquisition is efficient and where it is not. Blended CAC is fine for board reporting; segmented CAC is what operations teams need for budget decisions.
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