Customer Acquisition Cost
Customer acquisition cost (CAC) is the total sales and marketing spend divided by the number of new customers it produced.
What customer acquisition cost is
Customer acquisition cost, or CAC, is what it costs to win one new customer: total sales and marketing spend divided by new customers gained in the period.
Spend $5,000 in a month and gain 100 new customers, and CAC is $50.
Why CAC matters
CAC only makes sense next to what a customer is worth. If lifetime value doesn’t clear acquisition cost with room to spare, growth spends money to lose money.
What to include in CAC
- Ad spend across every paid channel
- Agency, tool, and creative costs
- Marketing and sales salaries, in the fuller version
- Only new customers in the denominator, not repeat buyers
Frequently asked questions
What’s a healthy CAC?
Relative to lifetime value, not in isolation. A common working rule is LTV comfortably above CAC, with payback arriving in months rather than years.
How do you lower CAC without cutting spend?
Convert more of the traffic you already buy, lean on channels with borrowed trust like referrals and reviews, and keep creative matched to the landing page.