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What does customer acquisition cost (CAC) mean?

Customer Acquisition Cost (CAC)

What does customer acquisition cost (CAC) mean?

Customer Acquisition Cost (CAC) is the cost that a company must spend to acquire a new customer. It includes all costs directly related to getting a new customer, such as advertising, sales promotion, distribution costs, and marketing.

The total sales and marketing costs. To calculate the CAC, proceed as follows for a specific period of time (month, quarter, or year):

  1. Add up spending on programs or advertising + salaries + commissions + bonuses + overheads.
  2. Divide the result by the number of new customers in this period.

For example, if you spend $500,000 on sales and marketing in a given month and get 50 customers in the same month, then the CAC for that month is $10,000.

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