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Customer Acquisition Cost

The total cost of acquiring a new customer — all marketing and sales expenses divided by the number of new customers gained — used to evaluate whether growth spending is sustainable.

Customer acquisition cost (CAC) is the total amount spent on marketing and sales in a period, divided by the number of new customers acquired in that period.

CAC = Total marketing and sales spend ÷ New customers acquired

If a restaurant spends $1,200 on marketing in March (social media ads, a local newspaper ad, printed flyers) and gains approximately 60 new customers (tracked through a loyalty program, first-time email signups, or POS customer records), CAC is $20 per customer.

CAC matters because it must be compared to what a customer is worth. If the average customer visits 8 times over two years and spends $22 per visit, the customer’s lifetime value (LTV) is $176. A $20 acquisition cost against $176 in lifetime revenue is excellent — a 8.8× return. A $60 acquisition cost against $90 in lifetime revenue (a customer who visits 4 times at $22.50) is marginal.

The LTV:CAC ratio is the key metric. Below 3:1, the business is spending too much to acquire customers relative to their value. Above 5:1, the business may be underinvesting in growth — there are profitable customers it’s not reaching.

CAC varies dramatically by channel. Word-of-mouth referrals have near-zero CAC. Social media ads may run $15–$40 per new customer. A food truck event might cost $500 and bring 30 new customers ($16.67 each). Tracking CAC by channel — not just overall — reveals which marketing efforts are worth expanding and which should be cut. See Weekly KPIs and Business Metrics and Developing a Marketing Plan.

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Contrasts with
Customer lifetime value
Date created
Date updated
Governed by
Conversion rate
Measures
Marketing plan
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Business disciplines marketing terms
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Cite

@misc{emsenn2026-customer-acquisition-cost,
  author    = {emsenn},
  title     = {Customer Acquisition Cost},
  year      = {2026},
  note      = {The total cost of acquiring a new customer — all marketing and sales expenses divided by the number of new customers gained — used to evaluate whether growth spending is sustainable.},
  url       = {https://emsenn.net/library/business/domains/marketing/terms/customer-acquisition-cost/},
  publisher = {emsenn.net},
  license   = {CC BY-SA 4.0}
}