Customer acquisition cost (CAC)
In short. Customer acquisition cost is the average amount a business spends to win one new customer. It is calculated by dividing total sales and marketing costs over a period by the number of new customers gained in that period, and is compared with the value each customer brings.
Last checked against its sources on 10 October 2026. How we write these.
CAC answers a simple question: what does it cost to get a customer? If you spent 3,000 pounds on advertising, tools and sales time in a month and gained 30 customers, your CAC is 100 pounds.
On its own the figure means little. It must be set against what a customer is worth. If each customer brings 80 pounds of gross profit over their lifetime, a CAC of 100 pounds loses money on every sale. If they bring 400, the picture is healthy.
Include the real costs: advertising, software, commission and the time of those who sell, not only ad spend. Many small businesses understate CAC by leaving out their own hours.
Track CAC by channel, because averages hide differences. Referrals may cost far less than paid search. Falling CAC can also be misleading if it reflects a short-term burst of easy customers. Used well, it shows which marketing is paying for itself and when growth would lose money.
Questions people ask
What is a good CAC?
It depends on customer value. Many businesses compare CAC to the gross profit a customer generates over time and look for a comfortable multiple, rather than a fixed number.
Should founder time count in CAC?
Ideally yes, at a realistic rate, otherwise the cost of acquiring customers is understated and the comparison with other channels is unfair.
Sources
- Customer Acquisition Cost (CAC) – Corporate Finance Institute checked 10 October 2026