Customer Acquisition Cost

Customer Acquisition Cost (CAC) tells you, on average, how much money you spend to win each new customer. It works by dividing the total sales and marketing spend tied to acquisition by the number of new customers gained in the same period, which turns a total budget into a per-customer figure. This makes it easier to judge whether growth is efficient and whether customer value is likely to exceed the cost of bringing people in.

Use this when evaluating the efficiency of advertising campaigns, sales outreach, referral programs, or any other customer-growth activity. It is especially useful for comparing CAC across channels, months, or campaigns to see which acquisition efforts are most cost-effective.

• Including all business expenses instead of only costs tied to acquiring customers
• Using total customers instead of only new customers in the denominator
• Mixing time periods, such as monthly spend with quarterly customer counts