I run a SaaS company based on a free open source CMS that we developed internally: LocomotiveCMS. For a while, everything was free and open source. 18 months ago we decided to turn it into a profitable company so we launched our first offer: LocomotiveHosting that provides hosting for your LocomotiveCMS websites, as well as free upgrades, daily backup and priority support for $19/month/website. I understand the importance of being able to understand my key metrics such as CAC but I just don't know how to calculate CAC accurately. We don't spend money on Adwords or on SEO which are often the examples that you'll see in blog articles talking about CAC for SaaS. And yet, it would be ridiculous to say that our CAC is $0. We do however have a full time employee working on content marketing. So among the following tasks (which are the ones that take most of our time), what should go into our CAC ? - development of the open source product, LocomotiveCMS - development of LocomotiveHosting, our paid offer - support to LocomotiveCMS users - support to LocomotiveHosting users - writing documentation and tutorials for LocomotiveCMS users. - writing guides, blog posts, sending newsletters to both LocomotiveCMS users and LocomotiveHosting customers - copywriting for our website - improving on-boarding: videos, demo websites, setting up autoresponders with vero or customer.io.... Obvioulsy, if many of the tasks mentioned above go into CAC, our CAC will soar to hundreds of dollars. Thanks a lot for your help
The CAC can be calculated by simply dividing all the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired in the period the money was spent. For example, if a company spent $100 on marketing in a year and acquired 100 customers in the same year, their CAC is $1.00.
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CEO of StartupLanes
Answered 4 years ago