The total cost of sales and marketing efforts required to acquire a new customer. It is the primary metric for determining the scalability of your growth.
CAC = (Total Sales + Marketing Expenses) / Number of New Customers Acquired
It is critical to distinguish between Paid CAC (cost to acquire a customer via paid channels only) and Blended CAC (total cost averaged across all acquisitions, including organic).
CAC is useless without context. It must be compared to Customer Lifetime Value (LTV). The golden ratio in SaaS and Ecommerce is an LTV:CAC ratio of 3:1 or higher.
Warning Signal
If your CAC is close to your LTV (e.g., 1:1 ratio), you are likely losing money on every customer after operating costs are factored in.