CAC (Customer Acquisition Cost)
Also known as: Customer Acquisition Cost
CAC is the total cost to acquire one new customer, including ad spend and all sales and marketing expenses, divided by customers won.
What it actually means
Customer acquisition cost is broader than CPA: where CPA usually counts only ad spend, true CAC folds in everything it took to win the customer — ad budget, agency fees, sales staff time, and software. It is the number you compare against lifetime value to judge whether your growth is sustainable. The healthy benchmark many businesses target is an LTV-to-CAC ratio of at least 3 to 1. If CAC creeps toward LTV, you are buying customers at a loss. Calculating CAC honestly forces you to account for the unglamorous costs that ad-platform dashboards quietly ignore.
A local business should know its real CAC before scaling ads. If a new patient or client costs $200 all-in and is worth $1,500 over time, spending more is the obvious move.
Related terms
LTV is the total revenue (or profit) a customer generates over the entire span of their relationship with your business.
CPA is the average cost to acquire one paying customer (or completed action), calculated as spend divided by conversions.
ROAS is the revenue generated for every dollar of ad spend, calculated as conversion revenue divided by ad spend.
CPL is the average cost to generate one lead, calculated as total ad spend divided by the number of leads collected.
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