What is CAC (Customer Acquisition Cost)?
CAC is calculated by dividing total marketing and sales cost in a given period by the number of customers acquired in that period. Ad budget, team salaries, tool licences, agency fees and campaign production costs — every direct and indirect line item — belongs in this calculation.
CAC on its own isn't good or bad; it only becomes meaningful next to LTV (Lifetime Value) and CAC payback period. The widely accepted rule is that LTV / CAC of 3x or higher signals healthy unit economics; a ratio below 1 means every new customer loses money for the business.
The best strategies for optimising CAC are channel-level attribution, conversion rate optimisation, shortening the sales cycle and strengthening organic and referral channels. Alignment between marketing and sales is one of the most decisive operational factors.