What is CAC (Customer Acquisition Cost)?
Definition
CAC (Customer Acquisition Cost) is the total cost of acquiring a new customer, including all sales and marketing expenses divided by the number of new customers acquired.
How to Calculate CAC
CAC = Total Sales & Marketing Expenses / New Customers Acquired
Example:
Total S&M spend: $100,000
New customers: 50
CAC = $2,000 per customer
LTV:CAC Ratio
🔴 Less than 1:1 - Unsustainable
You lose money on every customer.
🟢 3:1 or Higher - Healthy
You generate $3+ in LTV for every $1 spent on acquisition.