Customer Acquisition Cost
Also called: CAC, acquisition cost
What is Customer Acquisition Cost?
Customer acquisition cost is total sales and marketing spend for a period divided by the number of new customers it produced. It is the price of growth, measured per customer.
Why Customer Acquisition Cost matters
CAC only means something next to what a customer is worth. Spending ₹400 to win a customer who spends ₹300 once is a loss; the same ₹400 for someone who returns monthly is a bargain.
Customer Acquisition Cost formula
CAC = Total acquisition spend ÷ Number of new customers acquired
Compare against customer lifetime value; a ratio below one-third is a common health mark.
How Customer Acquisition Cost works in practice
Include everything: ads, discounts funded to attract first orders, listing fees and the staff time spent on marketing. Measure by channel, because a blended figure hides the one channel that is subsidising the rest.
Worked example
₹60,000 of monthly marketing producing 150 new customers is a CAC of ₹400.
Frequently asked questions
Yes, when they exist to win first-time customers. A funded first-order discount is marketing spend by another name.