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Business Terms
CAC (Customer Acquisition Cost)
Definition
The total cost of acquiring a new customer, including marketing and sales expenses.
Overview
CAC measures how much you spend to gain each customer. Lower CAC or higher customer value improves profitability. Track CAC by channel to optimize spending.
Example
Spending $5,000 on marketing that brings 50 new customers = $100 CAC.
Best Practices
Track CAC by marketing channel. Compare to customer lifetime value (LTV).
Common Mistakes to Avoid
Not including all acquisition costs
Not tracking by channel
Ignoring LTV ratio
Frequently Asked Questions
What's a good CAC?
Depends on LTV. Generally, LTV should be 3x+ CAC for healthy unit economics.