What is Customer Acquisition Cost (CAC)?

Customer Acquisition Cost (CAC) measures the total expense required to acquire a new customer. It includes marketing costs, advertising spend, and sales team expenses divided by the number of new customers gained.

CAC Formula

CAC = (Marketing Cost + Sales Cost) ÷ Number of New Customers

Why CAC is Important?

• Measures marketing efficiency
• Helps determine business profitability
• Important for SaaS and startup metrics
• Used in LTV vs CAC analysis