What is CAC (Customer Acquisition Cost)?
CAC(Customer Acquisition Cost)
CAC (Customer Acquisition Cost) is the total cost required to acquire a new customer, including all sales and marketing expenses.
Why It Matters for Startups
Serves as a vital financial metric for unit economics and investor reporting; tracking CAC helps founders manage cash runway and growth efficiency during ad spend budgets and marketing efficiency monitoring.
Detailed Deep Dive
CAC (Customer Acquisition Cost) is the total cost required to acquire a new customer, including all sales and marketing expenses (salaries, ad spend, software) divided by the number of customers acquired during that period. Monitoring CAC is critical for assessing marketing efficiency and ensuring that customer acquisition is sustainable relative to the lifetime value of the customer.
Frequently Asked Questions
Q:How is CAC calculated?
CAC = Total Sales and Marketing Expenses / Number of New Customers Acquired.
Q:What expenses are included in CAC?
Marketing ad spend, salaries of sales and marketing staff, software tools, and onboarding costs.
Quick Facts
- CategoryMetrics
- Key ApplicationAd spend budgets and marketing efficiency monitoring
Coverage Trend12 Weeks
Related Startup Terms
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