Skip to main content

CAC

CAC (Customer Acquisition Cost) is the average total cost a business spends to acquire one new customer.

How it works

It is usually calculated by dividing total marketing and sales spending over a given period by the number of new customers acquired in that period. For SaaS and subscription-based companies, it is a key metric because it directly affects profitability and growth sustainability, and it is typically compared against customer lifetime value (LTV).

Examples

  • 1.A company spends 100,000 RMB on advertising and sales activities in one month and gains 1,000 new users, giving it a CAC of 100 RMB.
  • 2.A SaaS startup found through analysis that the CAC of its paid search ads was too high, so it switched to content marketing to lower its acquisition costs.
  • 3.When evaluating the performance of different marketing channels, marketing teams calculate the CAC of each channel to decide how to allocate budget to the most efficient ones.