E-Commerce Dictionary
Acquisition Cost
Definition
The total cost associated with acquiring a new customer, including marketing and sales expenses.
Deep Dive
Acquisition Cost, often referred to as Customer Acquisition Cost (CAC), is the total expense a company incurs to acquire a new customer. This comprehensive metric includes all marketing and sales expenditures, such as advertising costs, salaries for sales and marketing teams, software expenses, agency fees, and any other overhead directly related to attracting and converting leads into paying customers. It's typically calculated by dividing the total acquisition expenses over a specific period by the number of new customers gained during that same period.
Examples & Use Cases
- 1A SaaS company's monthly ad spend and sales team salaries divided by new subscriptions
- 2The cost of running a social media campaign plus the commission paid to sales agents for new clients
- 3A retail brand calculating the total marketing budget for a quarter divided by the number of new shoppers making their first purchase
Related Terms
Customer Lifetime Value (CLTV)Return on Investment (ROI)Cost Per Acquisition (CPA)