Customer Acquisition Cost (CAC)
The total cost to land one new paying customer, everything in, divided by new customers.
What it is
CAC = (all sales + marketing spend in period) ÷ (new customers in period). All-in. Including salaries, tools, ads, agency fees.
Common mistake
Counting only paid ad spend. Misses real cost. Salary of a salesperson = part of CAC. Marketing tooling = CAC. Content team = CAC.
Healthy ratio
CAC : LTV should be roughly 1:3 minimum. If LTV is $1,000, CAC should be under $333. Otherwise the unit economics break.
When CAC climbs
Six external signals usually move CAC before funnel mechanics: more competitors bidding, category saturating, attention shifting platforms, ad costs climbing seasonally, buyer behavior changing post-event, channel mix outdated.
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