Pillar Guide · Lead Generation Consulting℠
What Is Customer Acquisition Cost (CAC)?
Customer acquisition cost (CAC) is the total sales and marketing cost to win one new customer. It is one of the most important numbers in any go-to-market motion, and it pairs with lifetime value.
Why CAC matters
CAC tells you whether your growth is efficient. If it costs more to acquire a customer than they are worth, the model does not work.
It anchors decisions about channels, pricing, and how aggressively to spend.
How to calculate CAC
Divide total sales and marketing spend over a period by the number of new customers won in that period.
CAC and LTV
CAC is only meaningful next to lifetime value. A healthy business earns back CAC well within an acceptable payback window.
Key takeaways
- CAC is the cost to win one customer
- It measures growth efficiency
- Calculate it as spend divided by new customers
- Judge CAC against lifetime value
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FAQ
Common questions.
What is a good CAC?
There is no universal number — what matters is CAC relative to lifetime value and your payback period.
What is CAC payback?
The time it takes for a customer's contribution to repay the cost of acquiring them.