What Is CAC (Customer Acquisition Cost)?

The total cost of acquiring a new customer, including all sales and marketing expenses.

The total cost of acquiring a new customer, including all sales and marketing expenses.

Customer Acquisition Cost (CAC) is the total cost of sales and marketing efforts needed to acquire a single new customer. It includes advertising spend, sales team salaries, tools, content production, and any other acquisition-related costs.

CAC is critical for evaluating the efficiency and sustainability of your growth. A low CAC relative to LTV means each customer is highly profitable; a high CAC suggests you need to optimize your funnel or find more efficient channels.

SaaS companies typically track blended CAC (total cost ÷ total new customers) and also CAC by channel to identify which acquisition channels deliver the best return.

Formula

CAC = Total Sales & Marketing Spend ÷ Number of New Customers Acquired

Example

If you spend $50,000 on sales and marketing in a month and acquire 100 customers, your CAC is $500.

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