Customer Acquisition Cost (CAC)

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Customer Acquisition Cost (CAC) is the total cost a business incurs to acquire a new customer. It includes expenses related to marketing, sales, advertising, and other efforts involved in converting a lead into a paying customer.

Why is CAC Important?

Understanding CAC helps businesses evaluate the efficiency of their customer acquisition strategies. By calculating CAC, companies can determine whether they are spending too much on acquiring customers compared to the revenue they generate.

How to Calculate CAC?

CAC is calculated using the formula:

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For example, if a SaaS company spends $10,000 on marketing and sales in a month and acquires 100 new customers, the CAC would be:

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This means the company spends $100 to acquire each new customer.

Written by apoorv

Apoorv is an SEO specialist and the founder of Derivate X, which is a specialized SEO and Content agency for SaaS. He has also founded and acquired companies like Stagbite and Booxoul.