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Glossary · Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) is the average total sales and marketing spend required to win one new customer.

CAC is judged against the value a customer brings: a sustainable model recovers CAC well within the customer’s lifetime value.

Together with lifetime value and churn, CAC describes the efficiency of growth and whether scaling is profitable.

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Related terms
Lifetime Value (LTV)
Lifetime value (LTV) is the total net profit a business expects to earn from a customer over the entire span of the rela…
Churn
Churn is the rate at which customers stop using or paying for a product over a given period, the inverse of retention.…
Unit Economics
Unit economics is the analysis of the revenue and costs associated with a single unit of a business — such as one custom…
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