Lots of startups focus obsessively on ROAS. But there's a more fundamental number that determines whether a business actually works long-term: Customer Acquisition Cost, or CAC.
ROAS tells you how the ad is performing. CAC tells you whether the whole business model is viable.
The basic calculation
CAC is the total amount you spend to bring in one new paying customer. That means all marketing spend, all sales effort, all the tools and salaries and ad budgets — divided by the number of new customers you actually acquired.
CAC = (Total Marketing + Sales Spend) / New Customers Acquired
Quick example: last month you spent $8,000 on Google Ads, $2,000 on a part-time sales rep, and $500 on tools. You acquired 42 new paying customers.
CAC = $10,500 / 42 = $250 per customer
That number means nothing on its own. It only tells you something when you compare it to what that customer is actually worth to you over time.
The ratio that actually matters: LTV to CAC
Customer Lifetime Value (LTV) is the total revenue you expect to collect from an average customer before they churn or stop buying.
If your CAC is $250 and your LTV is $900, your LTV:CAC ratio is 3.6:1. That's healthy. You make $3.60 in lifetime revenue for every dollar you spend acquiring a customer.
The benchmark for SaaS and subscription businesses is 3:1 as a minimum floor. Below 2:1, the business is burning money on growth. Above 5:1, you're probably underinvesting in marketing and ceding market share to competitors who will outgrow you.
How to improve your CAC without just cutting ad spend
Cutting ad spend to lower CAC is the amateur move. The smarter play is understanding which specific channels are bringing in customers with the lowest acquisition cost, and shifting budget there.
That requires tracking every campaign independently. If your Facebook campaigns have a $400 CAC and your email referral program has a $60 CAC, that's where you put more energy. You can't see that breakdown without link-level attribution on every campaign you run.
gometrify gives you per-link, per-campaign click attribution — so you can actually see which channels deliver the cheapest customers. Use our free CAC Calculator to run your current numbers, then sign up to start tracking which channels are actually driving them.