How much would you give to acquire a new customer?

I recently asked a SaaS (costing $1,000 per month) CEO how much he is willing to pay for a new customer. 

“$200-ish”, he replied.

“What? You make $12k from that customer annually. Surely your Customer Acquisition Cost (CAC) is higher than $200!”, I thundered in shock.

“But is it wise to spend more?” he asked, as my face reached for my palms to be buried in!

Often we are guilty of miscalculating our CAC. 

A successful business model that is priced at a win-win-win (owner, user, referrer) will always have enough margins for all three stakeholders.

Take Gopuff (about whom I raved yesterday) for instance, whose paid plan costs just $8/month.

They offered me $30 just for referring another user and promised to give that person $30 as well, after the first purchase.

I wanted to check if they were serious. 

So I referred my wife and we both got a referral bonus of $30 each.

It was a really compelling offer—so compelling that I didn’t need to think about it.

If your referral channel isn’t unlocked, it could be because your referral pricing is uninteresting!

To get more sales, first get more sellers.