How to Compare CAC Benchmarks by Industry

Customer Acquisition Cost (CAC) is a critical metric for businesses to assess profitability and growth potential. But here's the catch: CAC varies significantly across industries. Comparing your CAC to industry benchmarks provides context, helping you identify inefficiencies or opportunities in your acquisition strategy.

Key Takeaways:

• Why CAC Benchmarks Matter: CAC benchmarks differ by industry due to factors like sales cycles, competition, and customer behavior.
• Industry Variations: E-commerce averages $70 per customer, while B2B SaaS hits $702, and Fintech tops the list at $1,450.
• How to Use Benchmarks: Compare your CAC to industry standards, calculate your LTV-to-CAC ratio (aim for 3:1 or higher), and analyze by channels to optimize spending.
• Improvement Tips: Focus on retention, refine audience targeting, and leverage cost-effective channels like referrals and organic traffic.

Quick CAC Benchmarks (2025 Data):

Understanding and aligning your CAC with industry benchmarks ensures smarter decisions for growth and profitability.

What is Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is a metric that shows how much your business spends to bring in each new customer. It takes into account all sales and marketing expenses, such as advertising, salaries, software, and overhead costs.

Understanding CAC is key to evaluating how efficiently your company is spending on marketing efforts. Every new customer comes at a price, and knowing that cost helps you gauge whether your growth strategy is financially sustainable. When paired with metrics like Customer Lifetime Value (LTV) or Monthly Recurring Revenue (MRR), CAC gives you a clearer picture of your business's overall health and performance.

CAC Definition and Calculation

You can calculate CAC by dividing your total sales and marketing expenses by the number of new customers acquired during a specific time period.

For example, if you spend $50,000 on marketing and sales to acquire 500 new customers, your CAC is $100 ($50,000 ÷ 500).

Here are two common ways to calculate CAC:

• Basic Formula:
  CAC = Total Marketing Costs ÷ Total New Customers Acquired
• Comprehensive Formula:
  CAC = (Marketing Costs + Salaries + Software Costs + Professional Services + Overhead) ÷ Total New Customers Acquired

The comprehensive formula is more precise because it includes additional costs like employee wages, software fees, and overhead expenses.

When calculating CAC, focus solely on the cost of acquiring first-time customers, as this metric isn’t meant to include expenses related to repeat customers. Keep in mind that your sales and marketing cycle length can also impact the timing of when costs are incurred versus when customers are acquired.

This framework helps lay the groundwork for understanding why CAC varies across industries.

Why CAC Differs Between Industries

CAC is not a one-size-fits-all metric. It fluctuates depending on factors like sales cycles, competition, marketing strategies, and customer behavior.

For example, industries with quick, impulse-driven purchases - like travel - often have low CACs, averaging around $7. On the other hand, sectors like software, which involve longer and more complex sales processes, may see CACs nearing $395.

Competition also plays a significant role. Industries such as banking and insurance, where trust and regulatory compliance are critical, often require more investment in marketing to stand out. This results in higher CACs, with an average of $303 for these sectors.

The type of business - B2B or B2C - further influences CAC. B2B companies typically face higher acquisition costs due to longer sales cycles and multiple decision-makers. In contrast, B2C businesses often have shorter cycles and fewer hurdles, leading to lower CACs. For example, healthcare CACs can range from $50 to $500 depending on whether companies are targeting individual consumers or navigating institutional purchasing.

Lastly, the product or service model matters. Subscription-based businesses, like SaaS, can afford higher upfront CACs because they recover costs through recurring revenue. Meanwhile, companies reliant on one-time purchases need to be more cautious with their spending to ensure profitability.

To help put this into perspective, here’s a look at average CAC benchmarks across various industries:

These benchmarks provide a useful reference to help you evaluate your own CAC and refine your approach to acquiring customers.

CAC Benchmarks by Industry

Customer Acquisition Cost (CAC) plays a critical role in assessing how sustainable your business is. These benchmarks provide a clear picture of how your CAC stacks up against industry standards, helping you identify whether you're overspending or not investing enough in acquiring customers.

Industry CAC Averages

The 2025 data reveals noticeable differences in CAC across industries, reflecting the unique dynamics and challenges each sector faces. Here's a breakdown of average CAC by industry:

Fintech leads with the highest CAC at $1,450, driven by strict regulations, high customer lifetime values, and intense competition. Insurance follows closely at $1,280, reflecting the challenges of building trust in a competitive market.

On the other hand, B2B SaaS companies average $702, where recurring revenue models justify longer payback periods. E-commerce businesses, with their shorter sales cycles, average a much lower CAC of $70, while Arts & Entertainment sees the lowest CAC at $21, often benefiting from organic growth through viral marketing and word-of-mouth.

Industries like fintech and insurance generally require a longer time to recover acquisition costs, while sectors with quicker purchase decisions and lower transaction values maintain much lower CACs. These benchmarks can help you measure your efficiency and identify areas for improvement.

How to Use CAC Benchmarks

These benchmarks serve as a useful guide for setting CAC goals, but your targets should align with your business model and customer lifetime value (LTV). If your CAC is lower than the industry average, it might signal underinvestment in growth, potentially costing you valuable customers or opportunities to scale. On the flip side, if your CAC is too high, it's time to examine your marketing and sales strategies to find inefficiencies.

A critical metric to consider is the LTV-to-CAC ratio. A healthy ratio is typically 3:1 or higher, meaning the lifetime value of a customer should be at least three times the cost of acquiring them. For subscription-based businesses, this ratio can climb to 5:1 or even 6:1.

Payback periods also vary by industry. For example, fintech and enterprise software companies often take 18–24 months to recover acquisition costs, while e-commerce businesses usually do so within 3–6 months. Keep in mind that U.S. CAC averages tend to be higher than global figures due to regional differences.

It's worth noting that these benchmarks represent averages across companies of all sizes. Startups often face higher CACs as they work to establish themselves, while established brands benefit from lower costs thanks to brand recognition. Use these benchmarks to evaluate your efficiency and uncover opportunities to improve customer retention and increase order values.

How to Compare Your CAC to Industry Standards

Putting your Customer Acquisition Cost (CAC) in perspective requires more than just knowing the number - it’s about comparing it to relevant industry benchmarks. A $500 CAC, for example, doesn’t mean much unless you have the right context. Here’s how to evaluate your performance effectively.

Step 1: Calculate Your CAC

First, you need a clear and accurate calculation of your CAC. Use this basic formula:

CAC = Total Marketing + Sales Expenses / Number of New Customers Acquired

Precision is key here. Start by defining the time frame for your calculation. Many businesses opt for monthly or quarterly evaluations, but the right choice depends on your sales cycle. For instance, B2B companies with longer sales cycles often find quarterly CAC calculations more insightful than monthly ones.

Next, gather all relevant costs tied to acquiring customers. This includes:

• Salaries for your sales and marketing teams
• Advertising spend across all platforms
• Costs for content creation and campaign development
• Tools like CRMs, marketing automation platforms, and analytics software
• Expenses for events or trade shows
• Fees for third-party services
• Allocated overhead costs

Be sure to define what counts as a "customer" for your business - whether that’s a first purchase, a signed contract, or a completed onboarding process. For a deeper analysis, consider calculating both New CAC (focused solely on new customer acquisition) and Blended CAC (which includes upselling and cross-selling to existing customers). For comparing against industry benchmarks, New CAC is usually the most relevant.

Once you’ve calculated your CAC, it’s time to identify your specific industry segment for a meaningful comparison.

Step 2: Find Your Industry Segment

To compare your CAC effectively, you need to narrow down your industry segment. Simply picking a broad category won’t cut it - you’ll need to refine it by factors like company size, customer type, and geographic location.

For example, a B2B SaaS company serving enterprise clients will have very different CAC benchmarks compared to one targeting small businesses, even though both fall under the "B2B SaaS" umbrella. Similarly, whether your acquisition strategy leans heavily on organic or paid channels can make a big difference:

Geography also matters. CAC averages in the U.S. tend to be higher than global figures due to a more competitive market. Company size plays a role as well - startups often face higher CACs as they work to establish their brand, while larger, established companies can leverage their recognition and streamlined systems for lower costs.

After identifying your segment, you’ll need to dig deeper by combining CAC with other metrics.

Step 3: Analyze CAC with Related Metrics

CAC on its own doesn’t tell the full story. To get a complete picture, you’ll want to evaluate it alongside metrics like Customer Lifetime Value (LTV), which measures how much revenue a customer generates over their relationship with your business.

A key benchmark to aim for is the LTV-to-CAC ratio, which should ideally be 3:1 or higher. This means that for every dollar you spend acquiring a customer, you should earn at least three dollars in return - a common standard, especially in SaaS.

Breaking down your CAC by channel can also provide valuable insights. Look at how each marketing channel performs in terms of customer acquisition and LTV. This analysis helps you understand which channels deliver the best value, allowing you to adjust your budget accordingly. For example, if paid ads bring in customers with higher LTVs than organic methods, it might make sense to allocate more resources to paid campaigns.

"By understanding your CLV and your CAC, you can predict how much profit you're going to make but also know at what customer acquisition cost you start making profits" - Jonathan Aufray, Growth Hackers Business

Tracking these metrics over time is essential. While a rising CAC isn’t always a bad sign - especially if your LTV is growing even faster - a declining LTV-to-CAC ratio can indicate inefficiencies. Keep an eye on these trends across different customer segments to identify your most profitable acquisition strategies.

If you notice that your CAC is nearing or exceeding your LTV, it’s time to rethink your approach. This could mean focusing more on customer retention, revisiting your pricing model, or finding ways to make your acquisition efforts more efficient.

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Understanding and Improving Your CAC Results

Once you’ve benchmarked your CAC, the next step is to dig into what those numbers are telling you and take action to improve them. Your CAC results provide a snapshot of how efficiently you’re acquiring customers, and learning to interpret that data is key for sustainable growth. This analysis helps pinpoint inefficiencies and uncover opportunities for refinement.

What High or Low CAC Tells You

Your CAC - whether high or low - offers valuable insights into your operations. A low CAC often indicates that you’ve found cost-efficient ways to bring in customers, which can free up resources to enhance your brand and customer experience. However, an extremely low CAC might hide underlying issues, like hidden costs or attracting customers who don’t stick around. If customer retention is weak, even a low CAC can lead to higher long-term expenses.

On the flip side, a high CAC suggests inefficiencies in your acquisition strategy. For example, if you’re spending $1,450 to acquire a customer in a fintech SaaS business, but that customer generates over $6,000 in lifetime value, you’re still profitable. The problem arises when your CAC edges too close to the customer lifetime value. This could mean you’re overspending on marketing, targeting the wrong audience, or struggling with retention - all of which can hurt profitability and limit your ability to scale.

Other factors, like market conditions and the stage of your business, also play a role. Startups often face higher CAC due to early-stage investments, while established brands benefit from streamlined processes. Understanding these dynamics is the first step toward actionable improvements.

Using CAC Data to Improve Performance

To lower your CAC, focus on strategies that tackle inefficiencies head-on.

• Start by optimizing your channels. Review the performance of each marketing channel and shift your budget toward those delivering the best ROI. Organic channels, like SEO or referrals, often outperform paid methods in both cost and customer quality. For instance, referral customers typically have 20–40% lower CAC and higher lifetime value.
• Boost your conversion rates. Reducing friction in your conversion funnel can have a direct impact on CAC. With the average cart abandonment rate at 69.9%, even small improvements can make a big difference.
• Refine audience targeting. Use behavioral, demographic, and intent data to zero in on users most likely to convert. Visitors familiar with your brand often convert at 2–3 times the rate of cold traffic, showing the long-term value of building brand awareness through content marketing and SEO.
• Leverage marketing automation. Tools like automated email sequences, lead-nurturing workflows, and behavior-based messaging can streamline processes while maintaining a personal touch. This reduces manual effort and keeps prospects moving through the funnel.
• Focus on retention. Retaining customers is far more cost-effective than acquiring new ones. In fact, retaining customers is estimated to be five times cheaper. Even a 5% boost in retention can increase profits by 25% to 95%, making it one of the smartest areas to invest in.
• Build a referral program. Loyal customers can become your best advocates, driving new acquisitions. While repeat customers may only account for 21% of your customer base, they often generate nearly half of your revenue. Engaging these customers effectively can create a cycle of loyalty and growth.

Real-world examples show how these strategies can work in practice. Or & Zon achieved a 20% reduction in CAC (from $40 to $32) by improving their website’s user experience and leveraging social media and SEO. Similarly, Duradry lowered their CAC by 29% in just seven months by creating an online community and collaborating with authentic creators for user-generated content.

"We've optimized our website for a superior user experience, making it easier for customers to find and purchase products. Real-life testimonies and reviews about our products and service have also enabled us to build trust with potential customers, which, in turn, has helped lower our CAC." - Guillaume Drew, Founder of Or & Zon

How Phoenix Strategy Group Supports CAC Analysis

Taking the conversation about CAC benchmarks a step further, Phoenix Strategy Group excels at transforming analysis into actionable strategies. Effective CAC analysis isn’t just about crunching numbers - it requires advanced financial modeling, a solid data infrastructure, and strategic know-how. By combining fractional CFO services, cutting-edge data engineering, and M&A advisory expertise, Phoenix Strategy Group empowers growth-stage companies to refine their unit economics and leverage CAC insights for sustainable growth.

Unit Economics and Financial Modeling Services

Phoenix Strategy Group’s fractional CFO services cover FP&A, strategic finance, forecasting, and budgeting, providing businesses with precise CAC analysis and actionable insights. They develop financial models that seamlessly integrate CAC with other critical metrics like lifetime value, payback periods, and cohort performance.

What sets them apart is their advanced data engineering. They design ETL pipelines, data warehouses, and analytics dashboards that automatically sync financial data from multiple platforms. This real-time integration ensures your CAC calculations remain up-to-date, offering instant clarity on how marketing efforts impact customer acquisition costs across various channels and campaigns.

Their Monday Morning Metrics initiative gives leadership teams a head start each week, delivering fresh CAC performance data. Instead of waiting for month-end reports, businesses can quickly identify emerging trends and make timely adjustments before inefficiencies pile up. Additionally, their financial models connect CAC data directly to cash flow forecasts, offering a clear picture of how acquisition spending affects overall financial health.

"As a home service business owner, understanding complex financials and Unit Economics always seemed overwhelming - until we started working with Phoenix Strategy Group." - Rob Mulvin, Founder / CEO, All Pro Shade

Phoenix Strategy Group’s expertise spans industries like Healthcare & Tech, Consumer Brands, SaaS, Home Services, Real Estate, Professional Services, Private Equity, and Marketplaces. This broad experience allows them to tailor CAC insights to specific sectors, delivering nuanced analysis that generic tools often miss. These refined metrics also strengthen fundraising efforts and M&A negotiations, helping businesses present a compelling case to investors.

Fundraising and M&A Support

Phoenix Strategy Group leverages detailed CAC analysis to support fundraising and exit strategies. Investors scrutinize unit economics as a key indicator of a business’s scalability, making CAC data critical during funding pitches and exit planning. Their M&A advisory services help companies position themselves for higher valuations by showcasing how CAC metrics highlight growth potential and operational efficiency.

They have a strong track record of enhancing valuations through well-crafted CAC presentations, knowing exactly what investors look for in these metrics. By illustrating how current CAC trends align with future growth and market expansion plans, Phoenix Strategy Group ensures businesses stand out in competitive markets.

Their comprehensive valuation, due diligence, deal structuring, and negotiation services ensure CAC insights inform every strategic decision during the M&A process. They help buyers assess acquisition efficiency and assist sellers in framing their CAC trends as unique strengths.

"If you want to sleep better at night, hire Phoenix Strategy Group." - Patrick Wallain, Founder / CEO, ABLEMKR

Phoenix Strategy Group focuses on creating self-sustaining business systems that maintain CAC optimization even as companies scale. This approach ensures long-term competitive advantages that endure through ownership changes and market shifts.

With experience working with 240+ portfolio companies, Phoenix Strategy Group has honed proven methods for translating CAC insights into strategic growth opportunities. Whether preparing for Series A funding or planning an exit, their financial modeling and advisory services make CAC analysis a cornerstone of business success - not just another metric to monitor.

Conclusion

Understanding how your Customer Acquisition Cost (CAC) stacks up against industry benchmarks is crucial for making informed, data-driven decisions. For instance, while some industries average around $239, others can hit $1,143. These benchmarks provide the context you need to evaluate your performance and pinpoint areas for improvement.

If your CAC is higher than industry norms, it might signal inefficiencies in your acquisition strategy. On the other hand, an unusually low CAC could suggest you’re not investing enough in acquiring high-value customers. Keeping a balanced 3:1 ratio of Lifetime Value (LTV) to CAC is key. As Jordan T. McBride from ProfitWell explains:

"Customer acquisition cost is designed to measure and maintain the profitability of your acquisition teams. If your costs to get the customer through the door are higher than your Customer Lifetime Value, then the business cannot be viable. The best rule of thumb is to be spending 33% or less of your customers' lifetime value."

Leveraging optimized digital channels, combined with advanced tools like AI and data analytics, can lower CAC by as much as 40%. These insights set the stage for expert intervention and strategic refinement.

Phoenix Strategy Group specializes in turning CAC analysis into actionable strategies. Their services - ranging from fractional CFO support to data engineering and M&A advisory - are tailored to help businesses navigate the complexities of CAC optimization across various industries and growth stages. They provide the expertise needed to align marketing investments with measurable results.

Whether you’re gearing up for fundraising, planning an exit, or scaling operations, understanding and acting on CAC benchmarks is non-negotiable. Success lies in not just knowing your numbers but also using them to drive smarter, more confident decisions.

FAQs

How can I tell if my customer acquisition cost (CAC) aligns with industry benchmarks, and what should I do if it doesn’t?

To see if your CAC (Customer Acquisition Cost) stacks up against industry norms, compare your calculated number to the average for your sector. A common benchmark is maintaining a customer lifetime value (LTV) to CAC ratio of 3:1 or 4:1. For instance, if your CAC is on the higher side or your ratio falls below these levels, it could point to inefficiencies in how you're acquiring customers.

If your CAC seems off track, here are a few ways to address it:

• Refocus your target audience: Zero in on customers who are not only more likely to convert but also stick around for the long haul.
• Streamline your marketing efforts: Fine-tune your campaigns to cut unnecessary costs and get better returns on your investment.
• Increase customer value: Work on strategies to boost LTV, like improving the overall customer experience or introducing new services that add value.

By keeping an eye on your CAC and tweaking your approach as needed, you can help your business stay competitive and ready to grow.

What should I consider to ensure my CAC calculations are accurate and comparable over time?

To calculate Customer Acquisition Cost (CAC) accurately and make meaningful comparisons over time, it's crucial to account for all related expenses. This includes sales and marketing costs like salaries, software tools, advertising budgets, and any other associated expenditures. Keeping these costs consistently tracked and categorized is essential.

Another key factor is aligning your calculations with specific time frames - whether that's the duration of a campaign or the start dates of subscriptions. This helps avoid mismatches in timing. By regularly updating your data and sticking to the same calculation methods, you’ll ensure your CAC analysis stays reliable and easy to compare.

What is the LTV-to-CAC ratio, and how does it influence my business's growth strategy?

The LTV-to-CAC ratio is a key metric that shows how effectively your business turns customer acquisition efforts into long-term value. In simpler terms, it compares the lifetime value (LTV) of a customer to the cost of acquiring them (CAC), offering a clear picture of profitability and helping shape your growth plans.

A good benchmark for this ratio is 3:1 - this means a customer should generate at least three times the value of what it cost to bring them in. This balance ensures growth that’s manageable and leaves room to reinvest in marketing and operations. If your ratio edges toward 4:1 or higher, it’s a sign of strong profitability and potential for scaling up. On the other hand, a ratio below 3:1 might signal trouble, pointing to issues like high acquisition costs, weak customer retention, or a need to refine your strategy.

Related posts

• LTV:CAC Ratio: How to Calculate and Use It
• LTV:CAC Ratio: SaaS Benchmarks and Insights
• 7 SaaS Metrics for Customer Acquisition Funnels
• LTV vs. CAC: Key Ratios Explained