Definition
CAC is the total sales and marketing cost required to acquire a new customer over a defined period.
Why it matters
CAC determines how much you can spend to grow while staying within margin and payback targets.
Pricing implications
Higher ARPA and stronger gross margin reduce payback time and allow higher CAC.
Measurement tips
Use fully loaded sales and marketing costs, and measure CAC by channel and segment.
Checklist
- Define the time window for CAC.
- Include all sales and marketing expenses.
- Separate CAC by channel and segment.
- Compare CAC to LTV and payback targets.
- Track CAC trend after pricing changes.
- Validate CAC with cohort retention data.
- Exclude one-off anomalies from the model.
- Document assumptions and formulas.