Customer Acquisition Cost (CAC) is a measure of the cost associated with acquiring a new customer. This measure includes all of the expenses that a company incurs in order to convince a potential customer to make a purchase, such as advertising, marketing, and sales costs. CAC is typically expressed as the total cost of acquiring a new customer, divided by the number of customers acquired during a specific period of time.
For example, a company that sells subscription-based software might spend $1,000 on marketing and sales efforts in a given month, and acquire 100 new customers during that month. In this case, the company's CAC would be $1,000 / 100 = $10.
This means that it cost the company an average of $10 to acquire each new customer during that month.
