How do I calculate my target CAC before I've made a single sale?
The short answer
Work backwards from your gross margin per customer and how many months you're willing to wait to earn it back. A common starting rule: keep customer acquisition cost under one third of the lifetime gross profit you expect from that customer, and aim to recover the spend within 6 to 12 months. Since you have no real data yet, use conservative estimates and treat your first campaigns as buying the numbers, not proving profit.
Go deeper, your way
3 hand-picked resources, 3 link-checked. Pick how you want to dig in.
▶️ Video
✓ Link checkedFreeBeginner
Why we picked it
Kevin Hale from Y Combinator lays out the acquisition-cost and lifetime-value math in plain language, framed around how much you can afford to spend to win a customer. It is aimed at first-time founders, so there is no jargon wall, just the reasoning you need to set a target CAC. He is also refreshingly blunt that leaning only on paid acquisition is a weak growth story, which is worth hearing early.
Why we picked it
This is the piece nearly every other CAC explainer is quoting from, so go to the source. Skok walks through how CAC, lifetime value, and the payback period actually relate, and gives you concrete targets (aim for LTV at least 3x CAC, and try to recover CAC within 5 to 12 months) so you can set a number before you have any real data. It is dense, but it is the honest founder-level breakdown, not a hype piece.
Why we picked it
A ready spreadsheet so you can plug in your own margins and spend instead of rebuilding the formulas yourself. It maps CAC, lifetime value, the LTV:CAC ratio, and payback into a simple heatmap, which makes it easy to eyeball whether your target holds up as your assumptions change. No sign-up wall, just a Google Sheet you copy.
