Customer acquisition cost

This article has multiple issues. Please help improve it or discuss these issues on the talk page. (Learn how and when to remove these messages) This article may be in need of reorganization to comply with Wikipedia's layout guidelines. Please help by editing the article to make improvements to the overall structure. (January 2013) (Learn how and when to remove this message) This article may be confusing or unclear to readers. Please help clarify the article. There might be a discussion about this on the talk page. (January 2013) (Learn how and when to remove this message) This article may be too technical for most readers to understand. Please help improve it to make it understandable to non-experts, without removing the technical details. (January 2013) (Learn how and when to remove this message) (Learn how and when to remove this message)

Customer acquisition cost (CAC) is the cost of winning a customer to purchase a product or service. As an important unit economic, customer acquisition costs are often related to customer lifetime value (CLV or LTV).^[1]

With CAC, any company can gauge how much they’re spending on acquiring each customer. It shows the money spent on marketing, salaries, and other things to acquire a customer. Keep an eye on CAC so it doesn’t get out of control. For example, no rational company would spend $500 to acquire a new customer with an expected LTV of $300 because it would drain $200 of value per customer acquired.

CAC, combined with LTV is a frequently compared metric, particularly for SaaS companies. They can manage their expenses, see their growth, predict their future moves, and expand if the business allows.^[2]