What are realistic customer acquisition costs and how do you avoid overpromising growth?

Full Explanation

Early customer acquisition is often artificially cheap: founder-driven sales, marketing to warm networks, design partner discounts. Scaling CAC is 3-5x higher once you rely on paid channels and sales teams. Honest CAC accounting: measure by channel (paid search, social, sales, partnerships) separately—don't average. Example: a SaaS company with 100 customers costs £5,000 CAC on average. Breakdown: 30 from founder network (£500 CAC), 40 from paid social (£8,000 CAC), 30 from sales (£12,000 CAC). Claiming 5,000 average CAC is misleading—scaling requires more 8,000-12,000 CAC customers. Investor scrutiny: "What percentage of growth comes from founder-driven sales versus paid channels?" Founder-driven is not scalable. Paid channel CAC is scalable but fragile: if ad costs increase 30% or conversion drops, your unit economics break. Honest positioning: "We've achieved low CAC to date via founder sales. To scale, we'll transition to paid channels with 8-10x higher CAC. This requires strong LTV (>3:1 LTV:CAC) to remain profitable." This builds credibility because it shows you've thought through scaling economics. Overpromising ("We'll scale at £5,000 CAC") signals either naivety or dishonesty.

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