The True Cost of Fake Email Addresses for SaaS Companies

Every fake signup costs you money. Not just a little—enough to seriously impact your customer acquisition economics and decision-making. While you’re busy optimizing conversion funnels and reducing CAC, fake email addresses are silently inflating your costs and distorting your metrics.

The Hidden Multiplier on Your CAC

The average SaaS company spends $702 to acquire a customer in 2024. But here’s the problem: you’re spending that money attracting both legitimate users and people who will never convert. When 10-20% of your signups use disposable or fake emails, you’re essentially paying full acquisition costs for users with zero lifetime value.

Think of it this way: if your CAC is $500 and 15% of signups are fake, you’re wasting $75 per acquisition cycle. For a SaaS company acquiring 1,000 users monthly, that’s $75,000 annually burned on ghost accounts.

But the real damage goes deeper than wasted ad spend.

The Infrastructure Tax

Every new signup triggers a cascade of costs:

• Welcome emails and onboarding sequences
• CRM entries and database writes
• Cloud storage allocation
• Server resources for authentication
• Support system setup
• Analytics processing

For AI-powered SaaS products, this gets expensive fast. Usage-based fees from OpenAI, AWS, or similar providers add up when you’re serving free trials to users who never intended to pay.

One AI startup reported that free trial abusers using disposable emails were consuming thousands of dollars in compute costs monthly—all from users cycling through new emails to bypass trial limits.

Analytics Distortion: The Most Expensive Cost

Perhaps the most insidious cost isn’t financial—it’s strategic.

Fake signups inject low-intent users into your funnel, warping the data you use to make critical decisions. Your team might allocate budget to marketing channels that appear to drive growth but are actually just generating trial abuse. Your product roadmap could prioritize features based on engagement from users who’ll never convert.

When your trial-to-paid conversion rate is artificially suppressed by fake accounts, you might conclude your product needs improvement when the real issue is list quality. This leads to wasted development resources solving the wrong problems.

The LTV:CAC Death Spiral

Successful SaaS companies maintain a 3:1 to 5:1 ratio of customer lifetime value to acquisition cost. Fake emails destroy this ratio from both ends:

1. Inflated CAC: You’re dividing marketing spend by total signups, including fakes
2. Suppressed conversion rates: Fake users never convert, lowering your apparent funnel performance
3. Distorted cohort analysis: Your retention metrics include users who were never real customers

The result? Decision-makers see poor unit economics and might cut marketing spend, raise prices, or even question product-market fit—when the actual problem is data integrity.

Free Trial Abuse by the Numbers

Users exploiting disposable emails can access premium features indefinitely by repeatedly signing up for trials. Major platforms like Steam and StackOverflow have implemented disposable email blocking for this exact reason.

The impact compounds over time:

• Each abuser costs you infrastructure resources every billing cycle
• Support tickets from trial users drain team productivity
• Bandwidth and storage costs accumulate
• Email sending costs increase while deliverability decreases

Real Business Impact

In 2024, business email fraud drove $2.77 billion in reported losses. While this includes broader fraud categories, the underlying issue is the same: inability to verify email authenticity creates costly vulnerabilities.

For SaaS specifically, the costs manifest as:

• 15-25% of trial signups using temporary emails (based on industry observations)
• Degraded sender reputation from bounced emails
• Wasted customer success team hours on fake accounts
• Skewed A/B testing and experimentation results

The Solution: Verification at the Gate

The good news? This is entirely preventable. Email verification at signup blocks fake addresses before they enter your system.

Services like getemailverifier.com validate emails in real-time, detecting:

• Disposable email providers (10,000+ domains)
• Invalid syntax and non-existent domains
• Role-based addresses (info@, admin@)
• Temporary inboxes and spam traps

The ROI is straightforward: for every dollar spent on verification, you save multiples in wasted acquisition costs, infrastructure spend, and strategic missteps from bad data.

Calculate Your Hidden Costs

Try this quick exercise:

1. Monthly signups: _____
2. Estimated fake email percentage (assume 15%): _____
3. Your CAC: $_____
4. Monthly waste: #1 × #2 × #3 = $_____

Multiply by 12 for annual impact. Now add infrastructure costs, support hours, and opportunity cost of bad decisions based on polluted data.

For most SaaS companies, the number is eye-opening.

Taking Action

Implementing email verification isn’t just about cost savings—it’s about data integrity that enables better decisions. Clean signup data means:

• Accurate conversion tracking
• Reliable cohort analysis
• Trustworthy A/B test results
• Optimized marketing spend
• Genuine product feedback

The companies winning in SaaS aren’t just building great products—they’re making decisions based on clean data. Fake emails are a hidden tax you don’t have to pay.

Start by auditing your current signup flow. How many disposable emails are getting through? What’s it costing you? Then implement verification before the next billing cycle.

Your CAC, your metrics, and your strategic decisions will thank you.

About Email Verification

getemailverifier.com provides real-time email validation to protect your SaaS metrics and acquisition costs. Block fake signups, improve data quality, and make confident decisions based on verified user data.