What is customer acquisition cost (CAC)?
Customer acquisition cost is sales and marketing spend in a period divided by the number of new customers won in the same period. It measures what it costs to win one customer. Spend usually includes seller pay and commissions, marketing programs and tools. CAC is most useful next to what a customer is worth, such as lifetime value.
Why it matters to a revenue leader
CAC turns the sales budget into a unit cost the CFO can compare with returns. Many services companies do not track it, because the same sellers handle new logos and existing accounts. Splitting time between new and existing customers gives a truer CAC and shows whether expensive new-logo effort is paying off. Investors in venture-backed companies use CAC to judge whether more spending will produce efficient growth.
How to calculate it
CAC = sales and marketing cost for the period divided by new customers won in the period. A common mistake is charging all sales cost to new customers when much of it serves renewals and existing accounts.
Example
Fictitious numbersAn environmental services company spends $1.8 million a year on sales and marketing. About 60 percent of seller time goes to new customers, so $1.08 million is new-logo cost. It wins 90 new customers, so CAC is $12,000.
"What does it cost us to win one new customer, and how long do those customers stay?"
Sources
- Customer Acquisition Cost (CAC) (Corporate Finance Institute) checked 9 Oct 2026