Metrics

CAC (Customer Acquisition Cost)

The total cost of acquiring a new customer, including all marketing and sales expenses.

Customer Acquisition Cost (CAC) is calculated by dividing total acquisition costs by the number of new customers acquired. For example, if you spend €50,000 on marketing and acquire 500 customers, your CAC is €100. CAC is a critical metric for understanding business sustainability. It must be compared against Customer Lifetime Value (LTV) to determine if your acquisition strategy is profitable. A healthy LTV:CAC ratio is typically 3:1 or higher, meaning each customer generates at least 3x their acquisition cost over their lifetime. Many businesses make the mistake of calculating CAC using only ad spend, ignoring creative costs, agency fees, marketing salaries, and software tools. True CAC should include all costs associated with customer acquisition. Additionally, CAC should be segmented by channel and cohort to identify which acquisition sources deliver the most profitable customers.

Related Terms

Frequently Asked Questions

What is CAC?

CAC (Customer Acquisition Cost) is the total cost of acquiring a new customer, including all marketing and sales expenses. It's calculated by dividing total acquisition costs by the number of new customers. For example, €50,000 in marketing spend ÷ 500 new customers = €100 CAC.

What is the difference between CAC and CPA?

CAC measures the cost to acquire a new customer (first-time buyer), while CPA (Cost Per Acquisition) measures the cost per conversion, which may include repeat purchases. CAC is typically higher than CPA because it only counts new customers, not all conversions.

What is a good CAC?

A good CAC depends on your customer lifetime value (LTV). The ideal LTV:CAC ratio is 3:1, meaning each customer should generate 3x their acquisition cost in profit over their lifetime. E-commerce brands typically target CAC of €20-100, while SaaS companies may spend €500-5,000 depending on contract value.

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