Sjo

Founder glossary

What is CAC (customer acquisition cost)?

Customer acquisition cost, the total sales and marketing spend needed to win one new customer.

Open the free ltv : cac calculator →

Definition

Customer acquisition cost (CAC) is the average amount you spend on sales and marketing to win one new paying customer.

Formula

CAC = total sales and marketing spend in a period ÷ new customers won in that period

What to include

  • Ad spend and sponsorships
  • Sales and marketing tools
  • Content, design and agency costs
  • The share of salaries spent on sales and marketing, including founders' time

Leaving out founder time is the most common reason early CAC looks suspiciously low.

Example

Last quarter you spent $3,000 on ads, $600 on tools, and about $4,000 worth of your own time on outreach, and won 14 customers.

CAC = $7,600 ÷ 14 ≈ $543

Per channel, not just overall

Calculate CAC for each channel separately: ads, cold email, content, referrals. A blended average can hide a channel that costs three times the others.

How it's used

CAC on its own doesn't say much. It matters compared with what customers are worth (LTV) and how fast you earn it back (CAC payback). See LTV to CAC explained.

CAC payback periodLTVUnit economics

Guides that go deeper

Start here · Getting users · 3 min read

How to get your first users: a channel-by-channel guide

Where a startup's first 10, 100 and 1,000 users actually come from, how to pick the right channel for your product, and a guide to each one.

Getting users · 3 min read

How to get your first B2B customers

A step-by-step way for founders to land their first 10 B2B customers, from defining who to sell to and finding them, to running the first sales calls and closing.

Getting users · 3 min read

How to get your first users from Reddit (without a ban)

How founders can use Reddit to find early users without breaking subreddit rules, with how to pick communities, what to post, and what gets you banned.

Getting users · 3 min read

How to launch on Product Hunt: a founder's checklist

How to prepare and run a Product Hunt launch with or without an audience, from timing and assets to launch-day steps, and what results to realistically expect.

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