What Goes Into CAC at an MSP
CAC is only honest if every cost of winning clients is in it. At a small MSP most of that cost is the owner's time, which never shows up as an invoice, so it is the part most often left out.
- Owner and founder selling time, valued at what you would pay someone to do it.
- Sales and BDR salaries, commissions and bonuses.
- Marketing spend: ads, events, sponsorships, agencies and content.
- Sales tools: CRM seats, prospecting data, proposal software.
- Presales engineering time spent on assessments, network audits and proposals that did not bill.
Divide the total by the number of new clients won in the same period. Use a quarter or a year rather than a month, because MSP deals are few and a single large win makes a monthly figure swing wildly. The sales cycle length tells you how far back spend should reach.
CAC Only Means Something Next to Margin
A high CAC is fine if the client earns it back quickly and stays for years. That is why MSPs track CAC as a payback period and as a ratio against lifetime value, rather than as a standalone number. See the CAC Payback Period KPI and the LTV to CAC ratio for how those are measured.
Use gross margin, not revenue, when you work out payback. A client on a thin agreement takes far longer to repay the same acquisition cost than the revenue figure suggests, which is why gross margin sits underneath every useful CAC conversation.
Splitting CAC by Channel
| Channel | Cost That Is Easy to Miss |
|---|---|
| Referrals | Referral fees and the time spent nurturing partners |
| Outbound | BDR ramp time before the first meeting |
| Events | Travel, booth staff time and follow-up |
| Paid search | Landing pages and the leads that never qualify |
Spend on a channel often lands before the clients it produces, especially for events and content. Match each channel's cost to the wins it sources over a long enough window, or the newest channel always looks expensive and the oldest always looks free. A blended CAC can hide one channel carrying the rest. Tag each new client with its source in the CRM, then compare cost and win count per channel once a year has enough deals to mean something.
Common Ways to Lower It
The cheapest improvement is usually qualification: spending less presales time on prospects who were never going to buy. Improving win rate lowers CAC without cutting any spend. For an MSP still building its book, the answer on getting your first ten clients covers the channels that cost the least cash.
Common Questions
Do upsells to existing clients count in CAC?
No. CAC covers new logos. Track the cost of expanding existing clients separately, usually as account management cost.
Should onboarding costs be part of CAC?
Most MSPs keep onboarding in delivery cost, not CAC. Whichever you choose, keep it consistent so the trend stays comparable.
How do I value the owner's selling time?
Use what you would pay a salesperson to do the same hours. It is an estimate, but leaving it at zero is guaranteed to be wrong.
What if I won only two clients this year?
Then CAC is too noisy to act on. Look at spend and pipeline activity instead, and recalculate once you have more wins.