Customer Acquisition Cost (CAC)

What is Customer Acquisition Cost (CAC)?


Customer Acquisition Cost (CAC) is a metric that represents the total cost a business incurs to acquire a new customer. It includes all the expenses associated with sales and marketing activities that are intended to attract and convert new customers.

The formula for calculating CAC is as follows:

CAC = (Total cost of sales and marketing) / (Number of new customers acquired)

For example, if a company spends $100,000 on sales and marketing activities in a given period and acquires 1,000 new customers during that period, the CAC would be $100 per customer.

CAC can be a valuable metric for businesses to track, as it provides insights into the efficiency and effectiveness of their sales and marketing efforts. By comparing CAC to the Lifetime Value (LTV) of a customer, businesses can determine whether their acquisition costs are sustainable and whether they are acquiring customers profitably. Ideally, a business wants to keep CAC as low as possible while still acquiring customers with high LTVs.

More Terms

You Might Also Like

This is some text inside of a div block.

301 Redirect

What is 301 Redirect?

A 301 redirect is a permanent redirect that automatically sends users and search engines from one URL to another.

This is some text inside of a div block.

Cart Abandonment Rate

What is Cart Abandonment Rate?

The shopping cart abandonment rate is a metric that reviews the percentage of online shoppers who add an item to a cart or bag without buying those items.

This is some text inside of a div block.

Average Order Value (AOV)

What is Average Order Value (AOV)?

Average Order Value (AOV) refers to the median total of every order a merchant receives during a defined period.