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Performance

CAC (Customer Acquisition Cost)

Also known as: customer acquisition cost · acquisition cost

Definition

CAC is the total sales and marketing cost required to acquire one new paying customer over a given period, including media spend, agency fees, tooling and salaries.

The number most companies report is not CAC — it is cost per lead, or blended media cost divided by orders. True CAC includes every cost that exists to acquire customers: media, agency or in-house salaries, creative production, tooling and any commissions. Excluding those makes the figure flattering and useless for planning.

CAC only means something next to two other numbers: the lifetime value it produces and the time it takes to earn back. A high CAC is fine in a business with high margins and long retention, and fatal in one with thin margins and one-time purchases. Judge it against payback period, not against a benchmark from another category.

Formula

CAC = (Total sales + marketing costs) ÷ New customers acquired

Worked example

A UAE D2C brand spends AED 180,000 on media, AED 20,000 on agency fees and AED 20,000 on creative in a month, and acquires 400 customers. CAC is AED 550 — not the AED 450 the ad platform reports.

More in Performance

Attribution window

An attribution window is the period after an ad interaction during which a resulting conversion is credited to that ad — commonly 1, 7 or 28 days for clicks and 1 day for views.

Cohort analysis

Cohort analysis groups customers by a shared starting characteristic — usually acquisition month — and tracks their behaviour over time, revealing retention and value patterns that blended averages hide.

Consent mode

Consent mode is a mechanism that adjusts how analytics and advertising tags behave based on a user's consent choices, allowing modelled measurement when tracking consent is withheld.

Contribution margin

Contribution margin is revenue minus all variable costs — cost of goods, shipping, payment fees, returns and marketing — showing what each sale actually contributes toward fixed costs and profit.

Conversion rate

Conversion rate is the percentage of visitors or sessions that complete a defined action — a purchase, form submission or booking — within a measurement period.

CPL (Cost Per Lead)

CPL is advertising spend divided by the number of leads generated. It measures top-of-funnel efficiency but says nothing about whether those leads are qualified or ever convert.

All 87 terms
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