CAC (Customer Acquisition Cost)
CAC is the total cost of acquiring a new customer, including all marketing and sales spend across every channel.
CAC is the big-picture sibling of CPA. While CPA usually refers to a single campaign or channel's ad spend per conversion, CAC blends all marketing and sales costs — ads, content, salaries, tools, agencies — divided by total new customers acquired in the period.
CAC is essential for unit economics and fundraising because it captures the true cost of growth, not just the ad platform's view. It's the denominator in the LTV:CAC ratio that investors and operators use to gauge business health.
To reduce CAC, focus on organic channels (SEO, referrals, content), improve conversion rates so paid spend goes further, and expand into cheaper acquisition channels before saturating expensive ones.
Formula
CAC = Total sales & marketing spend ÷ New customers acquired
Example
Related terms
CPA
CPA is the average advertising cost to acquire one customer or conversion, calculated as total ad spend divided by total conversions.
LTV
LTV is the total revenue or profit expected from a single customer across their entire relationship with your brand.
MER
MER is total revenue divided by total marketing spend across all channels, giving a blended view of marketing efficiency.
ROAS
ROAS is the revenue earned for every dollar spent on advertising, expressed as a multiple (4x means $4 back per $1 spent).