Customer Acquisition Cost

Customer acquisition cost (CAC) is the average amount spent to win one new customer, placing marketing and sales spend against the new customers it brought.

CAC is the metric at the edge of growth economics because it is the one number that places cost beside outcome; a channel that brings users cheap but customers expensive looks good on volume and is exposed by CAC. There are two traps in computing it. First the numerator: spend is not just ad money — team salaries and tools count too; counted partially, CAC comes out artificially low. Second the denominator: “new customers” must be genuinely new, not returning ones, or the cost of growth is diluted. More importantly, CAC means nothing on its own; it speaks only when read beside customer lifetime value — a high CAC is not a fault if the customer returns several times that.