Customer acquisition cost (CAC)
also known as CAC · cost per acquisition
The average cost of winning a new client, including sales and marketing time and spend. Compared against lifetime value to check that growth is profitable.
For example, if an agency spends $20,000 on marketing and business-development time in a quarter and signs four new clients, its CAC is $5,000 per client. Set against a client worth $108,000 in lifetime value, that is a healthy ratio.
Why it matters to your firm: CAC tells you whether new business is actually paying off: if it costs more to win a client than they are worth, growth quietly loses money. Knowing your CAC lets you invest confidently in the channels that bring profitable clients and cut the ones that do not.
There is no fixed target - judge CAC against lifetime value, aiming for an LTV:CAC ratio of at least 3:1.
CAC = total sales & marketing cost ÷ new clients won in the period
Include the cost of time spent pitching, not just ad spend.
Customer acquisition cost calculator
Plug in your numbers - it updates as you type.
Prefer its own page? Open the cac calculator