CAC

What is CAC?

CAC — Customer Acquisition Cost — measures the total cost of acquiring a new customer. Unlike CPA, CAC includes all costs: advertising, sales, tools, staff, content production. It gives a broader and more honest picture of what customer acquisition actually costs.

What it means in practice

In practice, CAC requires you to gather costs from more places than just the ad dashboard. You need to include salaries, tools, consultants, and everything else that contributes to bringing a new customer in. Many companies massively underestimate their CAC because they only count ad spend. The key question becomes: what's the CAC:LTV ratio? If it's 1:1, you have a problem. 1:3 or better is generally a healthy business.

Why it matters

CAC determines whether your growth model is sustainable. You can grow fast with high CAC, but if LTV doesn't match, you're burning money. CAC forces you to treat acquisition as an investment with a clear return requirement — not as a budget line without scrutiny.

Common mistakes

• Confusing CAC and CPA — CPA measures ad cost, CAC measures everything
• Not including team time and tools in the CAC calculation
• Ignoring the CAC:LTV ratio and focusing only on volume