What is CAC (Customer Acquisition Cost)?

CAC shows the total cost of acquiring a new customer — including all marketing and sales costs. A healthy LTV:CAC ratio is at least 3:1.

Formula

CAC = Total Marketing & Sales Costs / Number of New Customers

Example

If you spent $15,000 on marketing in a month (ads $10,000 + software $2,000 + agency fee $3,000) and acquired 150 new customers, CAC = $15,000 / 150 = $100.

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Related Terms

CPA (Cost Per Acquisition)

CPA shows the cost of acquiring a single purchase through advertising. CAC is broader: it includes all marketing costs.

LTV (Customer Lifetime Value)

LTV shows the total value a customer generates over their entire relationship. A healthy LTV:CAC ratio is at least 3:1.

MER (Marketing Efficiency Ratio)

MER divides total revenue by total marketing spend — a platform-independent "blended ROAS." Shows overall marketing efficiency without attribution modeling.

Conversion Rate

Conversion rate is the percentage of visitors who become buyers. The global average is 2.5-3%, but industry, device, and traffic source dramatically affect it.

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What is CAC (Customer Acquisition Cost)? | Margyn Glossary