Customer Acquisition Cost
CAC
The fully-loaded cost to acquire one new paying customer.
Definition
Customer Acquisition Cost (CAC) is the total cost of sales and marketing divided by the number of new customers acquired in the same period. Fully-loaded CAC includes salaries, ad spend, agency fees, tools, events, and any other cost attributable to customer acquisition. CAC should be measured separately by channel (paid search, content, outbound, etc.) to identify which channels are most efficient.
Why It Matters
CAC defines the economics of your growth engine. A sustainable business must have a CAC that is substantially lower than the lifetime value (LTV) of a customer. The standard benchmark is LTV:CAC ≥ 3:1. If CAC keeps rising with scale, you likely have a ceiling on efficient growth.
Example
If you spend $50,000 on sales and marketing in a month and acquire 25 new customers, your CAC is $50,000 ÷ 25 = $2,000.