Business & Sales

What Is Customer Acquisition Cost (CAC)?

Customer acquisition cost (CAC) is the average amount a business spends to win one new customer, including marketing and sales costs. It is calculated by dividing total acquisition spending over a period by the number of new customers gained in that period.

Formula

CAC = (marketing + sales costs) ÷ new customers. Spending 20,000 to gain 400 customers gives a CAC of 50.

CAC and CLV

Comparing CAC with customer lifetime value (CLV) shows whether acquiring customers is profitable; many businesses track the CLV-to-CAC ratio.

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🔗 Related Terms

Customer Lifetime Value (CLV) Return on Ad Spend (ROAS) Conversion Rate Unit Economics

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.