What is customer acquisition cost (CAC)?
Customer acquisition cost (CAC) is the total amount you spend on sales and marketing to win one new customer. It’s the single most important efficiency metric in growth: if you can’t acquire customers for less than they’re worth, you can’t scale profitably no matter how good your ads look.
How to calculate CAC
The formula is:
CAC = Total sales & marketing cost ÷ New customers acquired
If you spent $50,000 across ads, salaries, tools, and agency fees and acquired 40 customers, your CAC is $1,250. Use the same time window for both numbers.
Why CAC matters for scaling
CAC only means something next to two other numbers: lifetime value (is a customer worth more than they cost?) and payback period (how fast do you recover the cost?). Growth-stage companies live and die on these ratios — they determine how aggressively you can invest in acquisition. Check yours with the LTV:CAC calculator next.