CAC (Customer Acquisition Cost)

CAC (Customer Acquisition Cost) is the total cost of winning a new customer, calculated by dividing all sales and marketing spend over a period by the number of customers acquired in that period. It is the benchmark for whether growth is sustainable: healthy businesses keep CAC well below the lifetime value of the customers they acquire. The standard guardrail is the LTV:CAC ratio, where roughly 3:1 or higher signals efficient growth. Rising CAC is often the first sign a channel is saturating.