Customer Acquisition Cost
CACWhat it costs, all-in, to win one new customer — ads, sales salaries, tools, the works.
How it's calculated
CAC = sales & marketing spend ÷ new customers won
Why it matters
If CAC is higher than what a customer is worth, growth loses money.
Related terms
Lifetime Value (LTV)
The total gross profit you expect from a customer across their whole relationship with you.
CAC Payback Period
How many months of a customer's payments it takes to earn back what you spent acquiring them.
Gross Margin
The share of revenue left after the direct cost of delivering your product (cost of goods sold).
Contribution Margin
What each sale contributes to fixed costs and profit after all the variable costs of that sale.