Definition
CAC measures the average cost per acquired customer: all marketing and sales spend in a period (ads, tools, salaries, agency) divided by the number of new customers won in that period.
CAC in isolation says little - it only gains meaning relative to customer value (LTV). A high CAC is no problem if the customer brings in a multiple over time. A low CAC is worthless if customers churn immediately.
The most common distortion: counting only media spend and hiding staff, tools and content. A complete CAC includes all acquisition costs - otherwise growth looks more profitable than it is.
Why it matters
CAC decides whether growth is sustainable or subsidised. Paying more for acquisition than the customer brings in buys revenue that widens losses instead of covering them.
In practice
- 01€10,000 of marketing budget brings 20 new customers → CAC €500.
- 02A healthy rule of thumb in B2B SaaS: LTV at least three times CAC (LTV:CAC ≥ 3).
- 03When CAC drops through better targeting, the same budget translates into more growth.
