Marketing
What is Customer acquisition cost?
Customer acquisition cost (CAC) is the average amount a business spends to gain one new customer. You calculate it by dividing total sales and marketing costs by the number of new customers won — a key gauge of marketing efficiency.
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Watch a 2-minute lesson with voice + animation that explains customer acquisition cost.
Key things to understand
- 1CAC is the average cost to win one new customer.
- 2Calculated as sales + marketing spend ÷ new customers.
- 3Lower CAC means more efficient growth.
- 4It's compared against customer lifetime value (CLV).
Frequently asked questions
- What is customer acquisition cost?
- The average amount a business spends on sales and marketing to gain one new customer.
- How do you calculate CAC?
- Divide total sales and marketing costs over a period by the number of new customers acquired in it.
- Why does CAC matter?
- If it's higher than the value a customer brings (CLV), growth loses money — so it gauges sustainability.