Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is a critical business metric representing the total expenditure a company incurs to acquire a new customer. It encompasses all sales and marketing expenses—including advertising spend, salaries of marketing and sales teams, software costs, and overheads—divided by the number of new customers acquired over a specific period. Understanding CAC is fundamental for assessing the financial viability and scalability of a business model, as it directly impacts profitability and growth potential.