Customer acquisition cost (CAC)

Customer acquisition cost (CAC) measures how much you spend to acquire one new customer. Calculate it by dividing total sales and marketing expenses by the number of new customers acquired during that period. This metric is crucial for understanding your growth efficiency.^[1]

CAC includes all costs associated with attracting and converting prospects: advertising spend, sales team salaries, marketing tools, and promotional offers. A healthy business model requires CAC to be significantly lower than the revenue each customer generates. Otherwise, you're losing money on every new customer.

Different acquisition channels have varying CACs. Organic search might cost less than paid ads, while referrals often have the lowest CAC.