What is a good EBITDA margin for a small business?

Most healthy small businesses run an EBITDA margin between 10% and 20%. Service businesses and SaaS often run higher (20–35%+), while restaurants and retail typically run 10–15%. CFO Grade compares your EBITDA margin to industry-specific benchmarks across 16 sectors.

What DSCR do lenders look for?

Most SBA and commercial lenders require a Debt Service Coverage Ratio (DSCR) of at least 1.25x. Construction surety bonds often require 1.5x or higher. A DSCR below 1.0x means your EBITDA does not cover your annual debt payments.

How does CFO Grade calculate the letter grade?

CFO Grade scores 24+ financial ratios across profitability, liquidity, leverage, and efficiency — weighted by industry. The composite score maps to a letter grade from A+ to F. The full methodology and benchmark sources are described in the report and the disclaimer page.

Yes. The full analysis, 24+ ratios, letter grade, and industry benchmarks are completely free with no signup. Optional paid features include a $9 PDF export and a $19 Pro Pass with AI-generated CFO memo and 30 days of unlimited PDFs.

Do I need to create an account?

No account is required. Your numbers stay on your device unless you explicitly opt in to anonymized peer benchmarking. Pro entitlements are bound to your device with a restore link you can email yourself.

Is CFO Grade financial advice?

No. CFO Grade provides educational insights for business owners and analysts. It is not financial, tax, legal, or investment advice. Always verify the output with a qualified professional before making business decisions.

Industry-Specific

Customer Acquisition Cost (CAC)

Short answer

Customer Acquisition Cost (CAC) is the fully-loaded sales + marketing spend per new customer landed. It is only meaningful when paired with LTV — a $500 CAC can be excellent or terrible depending on how long the customer stays and what they're worth.

Worth quotingA widely-cited institutional benchmark for SaaS is CAC payback within 12 months. Beyond 24 months, the growth engine effectively requires external capital to fund — useful directionally, but the specific cutoff varies by capital market conditions.

Formula

CAC = (Sales Spend + Marketing Spend) / New Customers Acquired

Add up everything you spent on sales and marketing in the period. Divide by the number of NEW paying customers you brought on. The result is what each customer cost you to land.

Why it matters

CAC only makes sense when paired with LTV (Lifetime Value). A $200 CAC is cheap if customers stay for 5 years and pay $100/month; it is a problem if they churn in 6 weeks. Investors and acquirers use CAC + payback period to gauge whether growth spend is creating durable value or burning cash.

Benchmarks

Standalone metricNot meaningful alone — compare to LTV

Conventional SaaS guidelineLTV:CAC ≥ 3×

Conventional SaaS guidelinePayback < 12 months

Industry variationVaries hugely by channel + sector

Worked example

Sales + marketing spend (quarter)$120,000
New paying customers240

CAC = $120,000 ÷ 240 = $500 per customer

Common questions about Customer Acquisition Cost (CAC)

What is Customer Acquisition Cost (CAC)?+

Customer Acquisition Cost (CAC) is the fully-loaded cost to acquire one new paying customer — sales + marketing spend divided by new customers won in the same period.

How is Customer Acquisition Cost (CAC) calculated?+

Add up everything you spent on sales and marketing in the period. Divide by the number of NEW paying customers you brought on. The result is what each customer cost you to land.

What is a good Customer Acquisition Cost (CAC)?+

A healthy customer acquisition cost (cac) is typically around LTV:CAC ≥ 3× — conventional saas guideline. Specific targets vary by industry and stage; check our benchmarks above for your sector.

Why does Customer Acquisition Cost (CAC) matter?+

CAC only makes sense when paired with LTV (Lifetime Value). A $200 CAC is cheap if customers stay for 5 years and pay $100/month; it is a problem if they churn in 6 weeks.

See your business's customer acquisition cost (cac).

Paste your numbers and CFO Grade computes this — plus 23 other ratios — in seconds, with your industry's benchmark already loaded.

Related concepts

Customer Lifetime Value (LTV)LTV:CAC Ratio CAC Payback Period

Where this matters most

See Customer Acquisition Cost (CAC) in the context of saas & software.

Industry-specific benchmarks, common pitfalls, and what lenders look for in this sector.

SaaS & software hub