Customer Acquisition Cost (CAC)
The average amount you spend on marketing and sales to win one new paying customer.
Customer Acquisition Cost is what it costs, on average, to turn a stranger into a customer. You add up the money spent getting customers over a period — ad spend, sales salaries, tools, agency fees — and divide by the number of new customers you won in that time. If you spent 2,000 dollars and gained 40 customers, your CAC is 50 dollars.
CAC only means something in context. Compared against customer lifetime value, it tells you whether each customer earns back more than they cost. Watched over time, a rising CAC warns that a channel is getting more expensive or less effective. Different channels usually have very different CACs, which is why owners track it per channel, not just overall.
Why it matters
If it costs more to win a customer than they're worth, growth loses money — so CAC is one of the clearest early signs of whether your business math works.