In this workout, we're going to calculate the blended customer acquisition costs or CAC, the paid CAC and the unpaid CAC. So let's begin by looking at our assumptions. We're provided with data over four different quarters, including the most recent quarter here.

So first, we have the number of new customers, and as you can see here, the number of new customers increases significantly over the four quarters we're provided with the estimate of the customers lost, which in Q1, that would be 1,000. And the number stays relatively stable over the four quarters. So that means that our number of customers at the end of each quarter is actually increasing over the period. We're also provided with some assumptions regarding the percentage of new customers generated from marketing campaigns, and that's gonna be 10% the SaaS price per customer. So this will be the revenue generated per customer, and we have some assumptions on our gross profit margin as well as our expenses. So let's begin by calculating our recurring revenue. So our recurring revenue in this case is gonna be equal to the number of customers at the end of each quarter times the SaaS price per customer. And in Q1, that comes out to be roughly 12.5 million.

Now let's calculate the total sales and marketing costs. So for that, we're gonna take our assumption of 40% of total sales and marketing costs as a percentage of recurring revenue. So I'm gonna take that 40% times the 12.5 million to get a total cost of roughly $5 million. Now let's compute the different types of costs within our total sales and marketing costs, starting with a sales team expenses. So here we have an assumption of 40% of our total cost coming from the sales team expenses. So I'm gonna take that 40% and multiply times my total sales and marketing costs. And that gives me about 2 million in Q1 marketing software expenses, that would be 20% of total sales and marketing costs, and that's about 1 million. And finally, our marketing campaign expenses, which is at 40% of our total sales and marketing costs, and that's again, roughly $2 million. So now that we have our estimates for Q1 of our recurring revenue as well as our different sales and marketing costs, let's go ahead and compute the blended CAC. So the blended CAC is gonna be calculated by taking the total sales and marketing costs and dividing this by the number of new customers for that period, in this case Q1. And that would be 2,400. And we get a blended CAC of $2081.30. The paid CAC is the CAC related to marketing campaign expenses. So in this case, we're gonna take the total expense related to marketing campaigns, which is around $2 million. We're gonna divide it by the number of new customers generated from these campaigns. And that would be, according to our assumption here, that would be 10% of the total number of new customers.

And that gives us a paid CAC of about $8,300. Now, the reason why the paid CAC is so much larger than the blended CAC is because our marketing campaign expenses are 40% of our total sales and marketing costs, yet we're only generating 10% of our new customers from these campaigns.

Now let's compute our unpaid CAC and that's gonna be related to any sales and marketing expenses that are not included in our marketing campaign.

So let's go ahead and take our total sales and marketing expenses. Let's actually add a parenthesis first here. So let's all, let's get the sales and marketing costs and let's subtract from this the marketing campaign expenses. So that gives us our sales and marketing costs, excluding these marketing campaigns. And now we're gonna divide this number by the number of new customers generated outside our marketing campaigns. So to compute that figure, we're gonna take the total number of new customers, 2,400, and we're gonna multiply times one minus the percentage of new customers generated from our marketing campaigns. So one minus 10% gives us 90%. We're gonna close that. Close that again. Press enter. And we get an unpaid CAC of $1,387.50.

Now we competed everything for Q1. So let's finish this by simply taking all of our calculations and copying them to the right across all four quarters.

And as we can see, our blended CAC starts at about $2,000 and it goes down significantly toward the end of the timeline to about $236. And the same is true for both our paid and unpaid CAC.