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CAC (Customer Acquisition Cost)

How much it costs, on average, to win a new customer — the sum of marketing and sales spending divided by the number of customers acquired in the period.

Also known as: cac · customer acquisition cost · what is cac · acquisition cost · cac marketing

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CAC stands for Customer Acquisition Cost: how much the business spends, on average, to win one new customer.

⚠️ Do not confuse it with the Brazilian e-CAC. The e-CAC is the Federal Revenue Service's virtual support center — a Brazilian tax-services portal, with no relation to marketing. A large share of Portuguese-language searches for "CAC" have that intent. This entry covers the business metric.

How to calculate it

$$CAC = \frac{marketing + sales\ investment}{new\ customers\ in\ the\ period}$$

What goes into the calculation

  • Paid media and agencies.
  • Marketing and sales salaries and commissions — the most forgotten item, and usually the largest.
  • Marketing and CRM tools.
  • Events, content, giveaways.

What does NOT go in

  • The cost of serving or retaining someone who already is a customer (that is an operating cost, not an acquisition cost).
  • Product or support teams.
  • Customers who came from a spontaneous referral should not inflate the denominator of a paid campaign — mixing organic with paid produces a CAC that is useless for deciding anything.

The calculation that actually matters: CAC × LTV

On its own, CAC does not say whether it is high or low. It only makes sense against LTV (Lifetime Value), how much the customer generates while they stay.

  • LTV / CAC < 1 — every new customer is a loss.
  • LTV / CAC ≈ 3 — the usual benchmark for a healthy recurring-revenue business.
  • A very high LTV / CAC — usually means the business is investing too little in acquisition, not that everything is going well.

And there is payback: how many months it takes for the customer to return the CAC. A good LTV with an 18-month payback can still break the cash flow.

Since LTV depends on how long the customer stays, churn and average ticket move the acceptable CAC — reducing churn cheapens acquisition without spending less on media.

Frequently asked questions

What is CAC?

Customer Acquisition Cost: how much the business spends on average to win a new customer, adding up marketing and sales and dividing by customers acquired in the period.

Is CAC the same thing as e-CAC?

No. The e-CAC is the Brazilian Federal Revenue Service's virtual support center, a tax-services portal. The acronym is the same; the subject has no relation.

What goes into calculating CAC?

Paid media, agencies, tools and — the most forgotten item — marketing and sales salaries and commissions. The cost of serving existing customers stays out.

What is the ideal ratio between LTV and CAC?

About 3 to 1 is the usual benchmark in recurring revenue. Below 1, every new customer is a loss; well above it usually signals underinvestment in acquisition, not excellence.

How do I reduce CAC?

By improving conversion at each pipeline stage before cutting media spend, and by reducing churn — a customer who stays longer raises LTV and makes the same CAC acceptable.

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