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SaaS Startup CPA - Calculating CAC?

I am looking for opinions on appropriately calculating CAC. Obviously CAC can be subjective but my understanding is that it should generally should include *all* sales and marketing expense, but there are two topics of pushback from management that I'd like to get opinions on. The first argument is to exclude a portion of marketing expense that is "brand" marketing verse direct selling and thus shouldn't be part of CAC. The second is to exclude all or part of salary expenses for selling managers, as they aren't directly selling but manage those who do. My thoughts are that both of these need to be included but am open to other opinions and insight!


Judd Rabb
Title: CFO
Company: RxWiki
(CFO, RxWiki) |

The standard CAC formula includes all sales and marketing expenses, and I believe this to be the industry norm. If you decide to exclude certain items, then you should footnote your results and explain to the reader why you have done so. You may want to check out David Skok's blog on SaaS metrics. It's an excellent resource.

Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

Firstly, I agree with Judd.

Second and IMHO, you are a startup! What "brand" marketing are you talking about? You are not a 5-10+ year old company that has established one. Everything and anything you do now is in pursuit of a customer/client and giving them the best product or service you can muster. Take out all product/service development and finance/acctg functions and you are left with customer acquisition cost.

Your brand depends on your product/service delivery and customer satisfaction.

I am not saying your founders are, but......the inclination to "massage" (lower the CAC) numbers at this early stage is a dangerous precedent.


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