Customer Acquisition Cost is the total sales and marketing spend required to win one new customer. You calculate it by dividing all acquisition costs over a period by the number of customers acquired in that period. It is the clearest measure of how efficiently a company turns budget into customers.

CAC is the number that tells you whether marketing is an investment or a leak. If a customer costs you $5,000 to acquire and is worth $4,000, you are paying to lose money. Track it against payback period and LTV, not in isolation. A rising CAC with flat close rates means the channel is saturating.

Example:

Spend $40,000 on sales and marketing in a quarter and close 8 new customers. CAC is $40,000 / 8 = $5,000 per customer.

What is a good CAC?

 
There is no universal number. A healthy CAC is one your customer lifetime value covers at least three times over, with a payback period under 12 months for most B2B businesses.

What is the difference between CAC and CPA?

 
CAC measures the cost to win a paying customer. CPA (cost per acquisition) usually measures the cost of a smaller conversion event, such as a lead or signup. A customer costs more than a lead.