Customer acquisition cost (CAC) is the average cost of acquiring a new customer, calculated as total sales and marketing expenditure divided by the number of new customers acquired in the relevant period. CAC is paired with customer lifetime value (LTV) to assess unit economics, with the LTV-to-CAC ratio being the primary measure of marketing efficiency in subscription businesses.
Assess acquisition cost alongside customer lifetime value, retention, gross margin and cash flow. Comparisons require consistent definitions and an appropriate peer group.