CAC, Customer Acquisition Cost
What it costs to acquire one new customer through paid marketing.
Formula
CAC = Ad Spend / Number of New Customers Acquired
CAC is total ad spend divided by the number of new customers that spend produced. If you spent $10,000 on Meta and acquired 200 new customers, your Meta CAC is $50.
CAC is meaningful only when compared to lifetime value. A $50 CAC is excellent if customers spend $300 over their lifetime with you. It is catastrophic if they buy once and never return.
CAC and ROAS measure different things but move together. Low ROAS usually means high CAC. Improving conversion rate lowers CAC without touching ad spend. Improving AOV improves ROAS without changing CAC.
Related terms
Lifetime Value · Return on Ad Spend · Conversion Rate · New-Customer ROAS