Glossary definition

What is customer acquisition cost (CAC)?

Customer acquisition cost (CAC) or the cost it takes marketing and sales teams to acquire a new customer is an important metric for companies to track. It is important to include sales costs in CAC to get a complete picture of your customer acquisition costs. Measuring marketing costs such as advertising, content creation and events will help you determine how dependent your growth is on marketing spend. If your company depends on Sales to convert prospects to customers, you will want to measure your CAC costs by including the sales component in your CAC calculation.

CAC will help you see your growth dependencies and your sales funnel efficiencies, and help you gauge the right balance between marketing and sales expenditure.

To calculate your CAC you add all of your marketing and sales expenses over a period of time and divide it by the number of new customers, or customers acquired in the same time period.

CAC for SaaS companies is often one of the SaaS metrics that investors expect to see. Many cloud accounting solutions for SaaS companies include a SaaS metrics dashboard and automate the CAC calculation with real-time data.

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