what is cac

CAC stands for Customer Acquisition Cost, which is the cost of acquiring a new customer for a product or service. It is a key business metric that is commonly used alongside the customer lifetime value (LTV) metric to measure the value generated by a new customer. CAC includes the resources and costs incurred to acquire an additional customer, such as sales and marketing efforts, salaries, and other expenses. By calculating CAC, companies can gauge how much they are spending on acquiring each customer and manage their expenses accordingly. CAC is also used to measure the return on investment of marketing efforts and to predict future moves and expansion. CAC is calculated by dividing all sales and marketing costs by the number of new customers gained within a specific period.