There’s no universal answer for what a ‘good’ customer acquisition cost is. The right number is specific to your business, and you can calculate it yourself in about five minutes.
Every time I see someone asking what a good CAC is in a marketing forum, the answers are useless — they’re pulling from different industries, different price points, different business models. A CAC that’s great for a SaaS company is catastrophic for a local service business.
Here’s how to calculate your actual target.
How Do You Calculate Your Target Customer Acquisition Cost?
Start with lifetime value. Not revenue — value. What does the average customer spend with you over the entire relationship, minus what it costs you to serve them?
If your average customer pays $3,000 and your cost to deliver that service is $1,500, your LTV is $1,500.
Now divide by three. That’s your maximum customer acquisition cost — the most you should be willing to spend to acquire a customer through paid advertising.
$1,500 LTV → $500 max CAC
This is the 1/3 LTV rule. It’s not a law of physics, but it’s a useful starting point that preserves enough margin to run a healthy business while reinvesting in growth.
Why One-Third of LTV Specifically?
At 1/3 LTV, you’re spending roughly 33 cents to make a dollar — which leaves room for other costs of running the business and a reasonable profit margin.
If you’re spending more than half your LTV to acquire customers, the business is technically growing but not building wealth. You’re working harder and harder for thinner and thinner margins.
If you can acquire customers at one-fifth or one-sixth of LTV, you have a highly efficient growth engine and should be reinvesting aggressively.
How Do You Turn CAC into a CPL Target?
Once you have your max CAC, factor in your close rate.
If you close 25% of leads, you need 4 leads to get one customer.
$500 max CAC ÷ 4 leads per customer = $125 max CPL
Now you have a cost per lead target that’s tied to your actual business economics — not a benchmark from a marketing blog that has nothing to do with your situation.
What If the Math Produces an Impossible Number?
This is where it gets interesting. Sometimes when you run this calculation, you get a CPL target of $8 or $12. And the actual cost per click in your market is $15.
If your CPL target is below what you can realistically achieve in your market, you have a business model problem — not a Google Ads problem.
I’ve had this conversation a lot. A business owner wants to run ads. The math says they can afford $10 per lead. Leads in their market cost $40+. The gap isn’t closeable through better targeting.
In that situation, the options are: increase prices so LTV goes up and max CAC follows, increase your close rate so you need fewer leads per customer, or find a different acquisition channel where the economics work.
Knowing your max CAC before you start advertising saves you from discovering this problem after you’ve spent $10,000.
What’s a Good CAC Benchmarks By Industry?
These are rough directional ranges, not targets:
- Local service businesses (HVAC, roofing, plumbing): $100-300 per customer
- B2B professional services: $500-2,000+ per client
- SaaS (low ticket): 3-6 months of MRR
- eCommerce: Highly variable, often 10-30% of first order value
Use these as a sanity check on your own calculation, not as a substitute for it.