Glossary
Customer Acquisition Cost (CAC)
The full cost of turning a stranger into a paying customer, including ads, tools, and any other spend divided by customers gained.
Customer acquisition cost, or CAC, is the full cost of turning a stranger into a paying customer. You calculate it by adding up everything you spent to win customers over a period, then dividing by the number of customers you gained.
Total acquisition spend / New customers = CAC
$2,000 spent / 40 new customers = $50 CAC
CAC is close to cost per acquisition, but people often use it more broadly. Where CPA usually refers to the cost of one action inside a single ad campaign, CAC tends to include the wider picture, such as software, landing page tools, and other spend that helped close the sale. It is the true, all-in price of a customer.
The number only means something next to what a customer is worth to you, their customer lifetime value. A $50 CAC is excellent if each customer eventually brings in $200, and it is a slow disaster if each customer only ever spends $30. This is the single comparison that decides whether a paid-growth business is healthy.
Beginners often forget the hidden pieces and undercount CAC, which makes an offer look more profitable than it really is. Count everything. To see how acquisition spend fits the wider profit picture, read how paid advertising actually makes money and revenue vs profit.