Definition
Customer acquisition cost is sales and marketing spend over a period, divided by the new paying customers those rupees produced. Blended CAC uses all spend. Paid CAC uses only paid channels. The useful number is the one you can act on.
In the room
How the word shows up in a real conversation.
You spend ₹3 lakh on ads and ₹1 lakh on a salesperson in a quarter and add 80 paying customers. CAC is ₹5,000. If LTV is ₹8,000, the unit may work. If LTV is ₹4,000, growth hurts.
Formula
CAC = sales and marketing spend ÷ new paying customers
Common mistake
Leaving founder time, discounts, and failed trials out of the spend. That CAC is fan fiction.
See also
Customer lifetime value (CLV)
Predicted revenue a customer will generate over their entire relationship.
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Customer acquisition
Process of gaining new customers through marketing and sales efforts.
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Payback period
Time required for an investment to recover its initial cost through cash flows.
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Unit Economics
Financial analysis of the profitability of individual units or transactions.
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