Customer Acquisition Cost (CAC)

What is Customer Acquisition Cost (CAC)?

Customer Acquisition Cost (CAC) is the total cost of acquiring a new paying customer — including sales and marketing salaries, advertising spend, commissions, agency fees and tooling — divided by the number of new customers acquired in the same period.

CAC payback period and LTV:CAC ratio are the principal indicators of acquisition efficiency. CAC trends are highly diagnostic: rising CAC may indicate market saturation, channel exhaustion or product-market-fit weakening.