CAC (customer acquisition cost)
Customer acquisition cost, or CAC, is what a business spends on average to win one new customer. It is calculated by dividing total sales and marketing spend over a period by the number of new customers gained in that period.
In practice
What it means when you are the one making the decision.
CAC is only useful alongside what a customer is worth. If a customer brings in more profit over time than it cost to acquire them, the channel is healthy; if not, it needs fixing or stopping. Many businesses track blended CAC across all channels and channel-specific CAC for each.
Be consistent about what counts as spend, such as ad budget, agency fees, tools and staff time, and over which period. Comparing numbers calculated in different ways leads to bad decisions.
Example
If a business spends ₹60,000 in a month and wins 20 new customers, its CAC for that month is ₹3,000.
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