--- title: Customer Acquisition Cost (CAC) | RGM® Glossary url: https://realgrowthmatters.com/glossary/customer-acquisition-cost/ updated: 2026-06-10 source_html: https://realgrowthmatters.com/glossary/customer-acquisition-cost/ --- # Customer Acquisition Cost /ˈkəstəməɹ ˌækwəˈzɪʃən kɔst/noun (initialism: CAC) What it costs, all-in, to win one new customer — the price side of every growth decision. Term : Customer Acquisition Cost Abbreviation : CAC (said "C-A-C" or "kak") Part of speech : Noun Field : Growth Economics ## Forms & parts of speech customer acquisition cost · noun The all-in cost to acquire one new customer. "Paid **customer acquisition cost** doubled, so we leaned harder on referrals." CAC · noun (initialism) The common shorthand for the metric. "Our blended **CAC** is $180; on paid social alone it's closer to $300." ## Definition in plain terms Customer acquisition cost is what you spend, on average, to win one new customer — total sales and marketing cost divided by the number of customers that spending produced. It is the price tag on growth, and it only means something next to what a customer is worth (lifetime value) and how long they take to pay you back. ## The mechanics Add up the sales and marketing costs for a period — ad spend, salaries, tools, agency fees — and divide by the new customers acquired in that period. "Blended" CAC includes everything (even organic and word-of-mouth wins); "paid" CAC isolates what a given channel actually costs. The honest version counts the fully-loaded cost, not just media spend. ## When it matters CAC is half of the central equation of growth economics. A business is healthy when a customer's lifetime value comfortably exceeds CAC (a common rule of thumb is LTV at least 3× CAC) and when the payback period is short enough to fund the next cohort. Rising CAC with flat value is the classic warning that a growth model is quietly breaking. **Worked example.** A company spends $50,000 on sales and marketing in a quarter and acquires 250 customers. CAC = $50,000 ÷ 250 = $200. If each customer is worth $900 in lifetime value, the LTV:CAC ratio is 4.5× — healthy. If a new channel pushes CAC to $400 for the same value, the ratio falls to 2.25× and the economics tighten fast. **Failure modes to watch.** Reporting media-only CAC and hiding the salaries, tools, and agency fees that make it far higher; mixing organic wins into "paid" CAC to flatter it; and optimizing CAC in isolation without checking lifetime value and payback — cheap customers who never repay are worse than expensive ones who do. ## Formula CAC = Total sales & marketing cost ÷ New customers acquiredUse the fully-loaded cost for the period. Pair with LTV:CAC ratio and CAC payback period to judge whether the economics work. ## Benchmarks CAC has no universal benchmark — it is only meaningful relative to lifetime value and payback period for your specific model. There is no universal "good" CAC It only means something vs. LTV Healthy LTV:CAC ratio ~3× or higher (rule of thumb) CAC payback period Often targeted under ~12 months Calculators [CAC calculators →](/tools/cac-calculator/) Ranges are illustrative; every published figure is cited from a named public source or labelled “RGM analysis.” ## Synonyms & antonyms ### Synonyms acquisition costcost per acquisition (CPA, loosely)cost to acquire ## Usage trends Search interest for this term over the last five years: [View interest-over-time on Google Trends →](https://trends.google.com/trends/explore?q=customer%20acquisition%20cost&date=today%205-y) ## Common questions How do you calculate CAC? : Divide total sales and marketing cost for a period by the number of new customers acquired in that period. What is a good CAC? : There is no universal number — CAC is only meaningful versus lifetime value (often targeted at 3:1 LTV:CAC or better) and payback period. What is the difference between blended and paid CAC? : Blended CAC includes all wins (even organic); paid CAC isolates the cost of a specific paid channel. ## Related tools & calculators - calculator[CAC calculator](/tools/cac-calculator/) - calculator[LTV:CAC ratio calculator](/tools/ltv-to-cac-ratio-calculator/) - calculator[CAC payback period calculator](/tools/cac-payback-period-calculator/) - calculator[Allowable CAC calculator](/tools/allowable-cac-calculator/) ## Resources & people to follow - book*Lean Analytics* — Croll & Yoskovitz (unit economics) - thought leaderBrian Balfour (Reforge) — growth & acquisition models - thought leaderDavid Skok (For Entrepreneurs) — SaaS metrics & CAC Curated, non-competitor resources verified per term. ## Related training - module[Growth marketing foundations](/training/growth-marketing-foundations/) - module[DTC growth](/training/dtc-growth/) — acquisition economics - module[Marketing analytics](/training/marketing-analytics/) ## Disciplines Areas of marketing where customer acquisition cost is a core concern: [Performance marketing](/training/growth-marketing-foundations/)[DTC growth](/training/dtc-growth/)[Marketing analytics](/training/marketing-analytics/) ## Read next ## Related terms [Lifetime value](/glossary/lifetime-value/)[LTV:CAC ratio](/glossary/ltv-cac-ratio/)[CAC payback period](/glossary/cac-payback-period/)[Retention](/glossary/retention/)[Churn rate](/glossary/churn-rate/) ## Sources 1. trends[Google Trends — "customer acquisition cost"](https://trends.google.com/trends/explore?q=customer%20acquisition%20cost&date=today%205-y)