The SaaS CAC Squeeze: Why Costs Are Up

What’s Going On With CAC?

If you run a SaaS business, you’ve probably felt it: it’s just a lot more expensive to get new customers than it used to be. Customer Acquisition Cost, or CAC, is rising, and it’s not a small bump. Over the last five years, CAC has gone up by as much as 50% for many SaaS companies, and in some verticals the increase is even steeper. This isn’t just an abstract statistic, it’s a shift that’s having a real impact on growth, profitability, and how SaaS companies think about their marketing and sales strategies.

Let’s break down what’s really happening, why it matters, and how SaaS companies can navigate this new landscape.

CAC Benchmarks: Where Are We Now?

The average CAC for SaaS companies sits at about $700 per new customer, but it’s not a one-size-fits-all number. There’s a huge range, depending on your sector, your target audience, and how you’re going to market.

For example:

• Fintech SaaS companies are paying a premium, often around $1,450 to acquire a single customer. These companies face strict regulations, intense competition, and customers with long consideration cycles.
• Cybersecurity and Medtech SaaS are in a similar boat, with CACs regularly north of $3,000.
• On the flip side, SaaS products in eCommerce or simple B2C verticals might see CACs closer to $250–$300, especially if their onboarding and conversion flows are streamlined and their audience is broader.
• B2B SaaS usually sees higher CAC than B2C, simply because enterprise sales cycles are longer and involve more decision-makers, pilots, and custom onboarding.

So while “the average CAC is $700” makes a nice headline, the real takeaway is that you need to know your vertical, your customer, and your unique customer journey. Otherwise, you’ll end up chasing someone else’s benchmarks that don’t fit your business at all.

What’s Causing CAC to Rise?

So, why are SaaS companies paying so much more to acquire customers than they used to? There’s no single answer, but a few big themes stand out:

1. Intense Competition

The SaaS market has exploded in the last decade. No matter what niche you’re in, there are probably at least a handful of competitors fighting for the same customers on Google, LinkedIn, and every other ad platform. This competition drives up advertising costs and makes it harder for any one brand to stand out without putting serious budget behind their campaigns.

2. Economic Uncertainty

Economic ups and downs create hesitation in buyers. Budgets get cut, purchases get delayed, and even “warm” leads take longer to close. As a result, companies have to spend more just to get the same number of deals over the finish line.

3. Complex Sales Processes

Especially for B2B and enterprise SaaS, the sales process itself is getting more complicated. More decision-makers are involved, deals often require live demos, custom proposals, and lengthy trials or proofs-of-concept. All this adds up, not just in ad spend, but in the time and effort of your sales and customer success teams.

4. Higher Customer Expectations

Customers aren’t just looking for a product that works; they expect world-class onboarding, fast support, robust integrations, and regular product updates. Companies are spending more on onboarding resources, educational content, and post-signup nurturing to meet these demands, which means the “true” CAC includes more than just ad spend.

How CAC Changes As SaaS Companies Grow

CAC isn’t static throughout a company’s lifecycle. Early-stage SaaS companies almost always have higher CAC, for a few reasons:

• They’re building brand awareness from scratch.
• Their product may not have strong word-of-mouth or referrals yet.
• Early marketing and sales investments are often experimental.

It’s not unusual for an early-stage company to spend 1–1.5x its annual recurring revenue (ARR) on customer acquisition just to break into the market. Over time, as the brand matures and marketing becomes more efficient, CAC often levels out, or even drops, as companies figure out what works and get more mileage from referrals, organic search, and existing customer networks.

Industry Benchmarks & The Importance of LTV:CAC

When you talk about CAC, you have to talk about LTV (customer lifetime value) too. The relationship between what you pay to acquire a customer and what you ultimately earn from them is critical.

Adtech: $950 CAC, 7:1 LTV:CAC
Business Services: $790 CAC, 3:1 LTV:CAC
Cybersecurity: $3,400 CAC, 5:1 LTV:CAC
Edtech: $1,400 CAC, 5:1 LTV:CAC
Fintech: $2,500 CAC, 5:1 LTV:CAC
Medtech: $3,700 CAC, 4:1 LTV:CAC

Most SaaS investors and operators aim for an LTV:CAC ratio of at least 3:1, meaning each customer should generate three times more revenue than it cost to win them. If your ratio is lower, you’ll struggle to achieve sustainable growth, especially as CAC keeps climbing.

What Can SaaS Companies Do?

So what’s the playbook in this new era of high CAC? Here are a few strategies:

1. Get Ruthlessly Efficient With Spend

Break down your CAC by marketing channel and campaign, not all channels are created equal. Figure out where you’re overpaying and where you’re getting the best ROI. Double down on the channels and tactics that actually convert.

2. Invest in Brand and Organic

Paid ads are important, but as competition grows, the long game is building a brand people trust and remember. Content marketing, community-building, SEO, and partnerships might take longer to pay off, but they drive sustainable, lower-CAC growth over time.

3. Prioritize Retention and Upsell

When acquiring new customers gets expensive, keeping the ones you have is crucial. Improving onboarding, nurturing relationships, and finding ways to increase expansion revenue (like upsells or cross-sells) all boost your LTV, making every acquisition dollar go further.

4. Optimize Sales and Onboarding

The smoother your sales process, the faster you close deals and the less you spend per customer. Tighten up your demo flow, remove friction from onboarding, and automate where possible. A seamless experience can drive referrals and lower your future CAC.

5. Embrace Data-Driven Experimentation

Test new channels, creative, and offers. Track what works and what doesn’t. SaaS companies that run experiments and iterate quickly tend to outpace those that stick to a single playbook.

The Bottom Line

Customer acquisition for SaaS companies is getting more expensive, it’s a fact of the current market. The days of easy, cheap signups are fading, especially as competition grows and customers become more discerning. But it’s not all doom and gloom. The companies that adapt, by optimizing spend, investing in long-term brand, and doubling down on retention, can still build healthy, sustainable growth engines.

Rising CAC is a challenge, but it’s also an opportunity to get creative, refine your strategy, and build deeper relationships with your customers. In the end, those are the companies that win, regardless of what the average CAC number says.