Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) tells you how much sales and marketing spending is required, on average, to gain one new customer. It works by dividing the total acquisition spend by the number of new customers actually won during the same period, which turns a lump sum expense into a per-customer cost. This helps businesses compare marketing efficiency across campaigns, channels, or time periods.

Use CAC when you want to measure how efficiently a business is turning marketing and sales spend into new customers, such as for a monthly report, campaign review, or startup growth analysis. It is especially useful when comparing customer acquisition methods like paid ads, email outreach, referrals, or sales-led outreach.

• Using total revenue instead of only sales and marketing cost
• Counting leads or sign-ups as customers before they actually buy
• Mixing time periods, such as dividing one quarter's spending by a different quarter's customer count