What is customer acquisition cost?
CAC is the cost required to acquire a new customer, usually measured by channel, campaign, or cohort.
Direct answer
Customer acquisition cost equals acquisition spend divided by the number of new customers acquired in the same period or cohort.
Why this matters
CAC helps decide whether first-order economics can support repeat purchase, upsell, and retention plans.
What to check
Use this term as an operating checkpoint, not just a glossary definition.
- Separate new customers from returning customers.
- Compare CAC against first-order contribution margin and expected LTV.
- Track CAC by channel because blended CAC can hide weak campaigns.
Common mistake
A low blended CAC can still be unhealthy if one channel is buying cheap low-quality customers who refund or never repeat.
FAQ
Should CAC include agency fees?
For business-level CAC, include media spend, agency fees, creative production, and acquisition tooling. For campaign CAC, keep the scope explicit.
Is CAC useful for a brand with low repeat purchase?
Yes, but the CAC ceiling should be tied more tightly to first-order contribution margin because LTV upside is limited.
Why can CAC rise while ROAS looks stable?
AOV, returning-customer mix, or attribution rules may mask that new customers are getting more expensive.