What are CAC / Customer Acquisition Costs?
CAC or Customer Acquisition Cost refers to the cost incurred by a business in acquiring a new customer. It is the sum of all the expenses incurred in attracting and converting a prospect into a paying customer.
The calculation of CAC includes all the costs involved in marketing, advertising, sales, and other promotional activities used to acquire new customers.
These costs may include advertising expenses, website development costs, marketing salaries, and commissions paid to sales personnel.
How to calculate CAC / Customer Acquisition Costs
To calculate CAC, divide the total cost of acquiring new customers by the number of customers acquired during the same period. The result is the average CAC per customer. CAC is an essential metric for businesses as it helps them determine the effectiveness of their marketing and sales strategies, and to identify areas for improvement.
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