What is Customer Acquisition Cost (CAC)? Customer Acquisition Cost, or CAC, is the average amount a business spends to acquire one new customer, including costs like marketing, sales, advertising, tools, and campaign expenses.
Customer Acquisition Cost (CAC) Explained CAC tells a business how much it costs to get a new customer.
For example, if a company spends $1,000 on ads and gets 10 new customers, each customer costs $100 to acquire.
CAC is important because getting customers should not cost more than the value those customers bring back.
A low CAC usually means the business can grow more efficiently. A high CAC means the team may need better targeting, messaging, pricing, or retention.
What Customer Acquisition Cost (CAC) Means For Audience
Use Case
Growth and marketing teams
Measure how efficiently campaigns turn spend into new customers.
Founders and finance teams
Understand whether customer acquisition is profitable and sustainable.
Sales and revenue teams
Compare acquisition costs across channels, segments, and sales motions.
Examples A SaaS company spends $20,000 on paid ads, sales tools, and marketing content in one month and gains 100 new customers. Its CAC is $200.
An e-commerce brand compares CAC from TikTok ads, Google Search, and referrals to see which channel brings customers most efficiently.
A B2B company finds that enterprise customers have a higher CAC because they require sales calls, demos, and longer buying cycles.
A startup compares CAC with CLV and discovers that customers are worth $900 over time but cost $300 to acquire, creating a healthy ratio.
FAQs What does CAC stand for? CAC stands for Customer Acquisition Cost.
How is CAC calculated? CAC is calculated by dividing total acquisition costs by the number of new customers acquired.
Why is CAC important? CAC shows whether a business can acquire customers profitably and grow efficiently.
What is a good CAC? A good CAC depends on the business, but it should usually be lower than the customer’s lifetime value.
How can a company reduce CAC? A company can reduce CAC through better targeting, stronger referrals, higher conversion rates, and more efficient sales.