Customer Acquisition Cost (CAC) is one of the most important metrics in marketing and growth strategy. At its core, CAC tells you how much money you’re spending to get a new customer. Think of it as the price tag on growth - if you don’t know your CAC, you’re flying blind.

How to Calculate CAC

CAC = Total Marketing & Sales Spend / Number of New Customers Acquired

Let’s say your company spends $100,000 on marketing and sales in Q1 and brings in 500 new customers. Your CAC is:

$100,000 ÷ 500 = $200

That means you're spending $200 to acquire each new customer.

Why CAC Is Critical
Knowing your CAC helps answer vital business questions:

• Is your marketing efficient?
• Are you scaling profitably?
• How long until you recoup the cost of acquiring a customer? (This ties directly into Customer Lifetime Value, or CLTV.)

If your CAC is too high compared to the revenue that customer brings over time, you’re not running a business—you’re funding a bonfire.

Optimizing CAC
Smart marketers and growth teams constantly work to lower CAC while maintaining or improving customer quality. This might include:

• Sharpening ad targeting to reduce waste
• Improving website conversion rates
• Investing in organic channels like SEO or referrals
• Aligning sales and marketing for better lead nurturing