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Glossary > Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is the total amount it costs to acquire a new customer. It includes all marketing, sales and service expenses associated with acquiring a new customer. CAC is a key metric in calculating the lifetime value of a customer.

To calculate CAC, add the Cost of Sales with the Cost of Marketing, and divide that number by the amount of New Customers Acquired.

CAC = (Cost of Sales + Cost of Marketing) / New Customers Acquired.

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Similar Terms:

Annual Recurring Revenue (ARR)
Average Revenue Per User (ARPU)
Committed Monthly Recurring Revenue (CMRR)
Customer Retention

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