Customer acquisition cost
CAC · Total marketing and sales spend over a period divided by the number of new customers won in that period.
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Why it matters
The real cost of winning a customer is more than ad spend: agency fees, tools and the sales team's time are included too. Compared with the value a customer will bring, customer acquisition cost shows whether growth is sustainable.
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Example
A software company spends 90,000 on ads and 60,000 on tools and the sales team in a quarter and wins 30 new customers. The acquisition cost is 5,000; since a customer brings 12,000 a year on average, the investment pays off.
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Common mistake
Counting only ad spend. When hidden costs are left out, channels look more profitable than they are and budget goes to the wrong ones.
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Related terms
Related services and guides
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