What is Customer Acquisition Cost (CAC)?
Also known as: customer acquisition cost
Customer Acquisition Cost (CAC) is the average total sales and marketing cost required to acquire one new customer.
What is CAC?
CAC is the cost side of your growth equation. On its own it's just a number; compared to LTV and measured against payback period, it tells you whether acquiring customers builds or destroys value.
How to calculate CAC
Worked example
You spend $120,000 on sales and marketing in a quarter and acquire 150 customers. CAC = $120,000 ÷ 150 = $800.
What's a good CAC?
Judge CAC by its companions: an LTV:CAC of 3:1 or higher and a CAC payback under 12 months are the common targets.
Frequently asked questions
What costs go into CAC?
Fully-loaded sales and marketing: salaries and commissions, ad spend, tools, agency fees, and overhead attributable to acquisition — not just ad dollars.
Blended vs paid CAC?
Blended CAC includes all customers (including organic); paid CAC counts only customers from paid channels. Paid CAC better reflects the cost of scaling acquisition.