Business Models & Unit Economics

Customer Acquisition Cost (CAC)

What you pay, all-in, to win one new customer.

Your numbers

Paid media spend2,000 $

Other acquisition costs (people, tools, content)1,000 $

New customers acquired100 customers

customers

Results

CAC

$30

All-in cost to acquire one customer

Naive CAC (ads only)

$20

What it looks like if you forget people and tools — note the gap

How it works

CAC = total acquisition spend ÷ new customers acquired in the same period.

Include everything you spent to acquire: ad spend, content, tools, and the loaded cost of sales/marketing people. Founders who only count ad spend understate CAC by 2–3× and make channels look profitable that aren't.

CAC only means something next to what a customer is worth (LTV) and how fast you earn it back (payback period). A $200 CAC is great for a $2,000-LTV product and fatal for a $99 one-off purchase.

Worked example

You spend $2,000 on ads plus $1,000 on a freelancer and tooling, and acquire 100 customers: CAC = $3,000 ÷ 100 = $30. Counting only ads would have told you $20 — a 33% understatement.