CAC Payback: SGD 500 to Acquire, SGD 50/Month Revenue, 10-Month Payback = Long
E-commerce: monthly marketing spend SGD 10K, customers acquired 20. CAC = SGD 500/customer. Monthly profit per customer SGD 50 (gross profit after COGS/support). Payback: SGD 500 ÷ SGD 50 = 10 months. If customer LTV = 12 months of profit = SGD 600, payback 10 months is acceptable (ROI 20% = SGD 100 profit above CAC). But if LTV = 8 months (churn early) = SGD 400 profit, then payback is unprofitable (lose SGD 100 per customer).
Calculating CAC#
CAC = Total Marketing Spend ÷ New Customers Acquired. Example: spent SGD 10K on ads last month, acquired 20 customers = CAC SGD 500. Includes: ads, email, sales team, discounts. Everything that brings customer in.
CAC Payback Period#
Payback = CAC ÷ Monthly Profit per Customer. If CAC SGD 500 and customer generates SGD 50/month profit = 10 months payback. Should payback <LTV (customer lifetime). If LTV = 12 months, payback 10 months = healthy (2-month buffer). If LTV = 6 months, payback 10 months = death spiral (lose money per customer).
Paid ads: CAC SGD 500-1K (expensive, scalable).
CAC by Channel Variation#
Paid ads: CAC SGD 500-1K (expensive, scalable). Organic/referral: CAC SGD 100-300 (cheap, limited scale). Partnerships: CAC SGD 200-500 (moderate). Most businesses mix channels: 30% paid, 50% organic, 20% partnerships. Blended CAC SGD 350. Then optimize: cut expensive channels, grow cheap ones.
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AskBiz CAC Tracking#
Tracks acquisition spend and customer count by channel. Calculates CAC per channel, payback period. "Paid ads CAC: SGD 800. Organic CAC: SGD 150. Payback: paid ads 16 months, organic 3 months. Shift 30% ad spend to organic growth (content marketing, referral incentives). Projected blended CAC reduction: SGD 350 → SGD 280, payback 5.6 months → 4.5 months."
- E-commerce: monthly marketing spend SGD 10K, customers acquired 20.
- CAC = SGD 500/customer.
- Monthly profit per customer SGD 50 (gross profit after COGS/support).
People also ask
What CAC is acceptable?
If LTV = 12 months, CAC should be <30% of LTV = CAC <SGD 180 (if SGD 600 LTV). For SaaS: CAC <SGD 300, payback <12 months. For retail: CAC <SGD 100, payback <3 months.
How do I reduce CAC?
Improve conversion rate (same ad spend, more customers), reduce ad cost per impression, shift to cheaper channels (organic, referral), negotiate better rates with partners.
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Track CAC & Payback Period (Optimize Customer Acquisition)
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