What is Cost of Customer Acquisition (CAC)?
In digital marketing and SaaS, Cost of Customer Acquisition (CAC) is one of the most important metrics for long-term survival. It measures how much you spend to acquire a single paying customer.
If you don’t understand your CAC, you may be generating revenue while silently losing money.
The Standard Cost of Customer Acquisition Formula
CAC is calculated by dividing your total sales and marketing expenses by the number of new customers acquired during the same period.
CAC = Total Marketing & Sales Costs / New Customers
What Costs Should Be Included?
Many businesses make the mistake of counting only ad spend. A realistic CAC must include all customer acquisition costs:
- Advertising: Facebook Ads, Google Ads, native ads
- Creative: Content writing, design, video production
- Tools: CRM, email marketing software, analytics
- Team: Marketing and sales salaries
- Overhead: Consulting, platforms, infrastructure
Why CAC Must Be Compared With LTV
A high CAC is not always bad — as long as your Customer Lifetime Value (LTV) is significantly higher.
Most profitable businesses aim for an LTV:CAC ratio of at least 3:1. This ensures sustainable growth and cash flow stability.
How to Optimize CAC and Scale Profitably
The real goal is lowering CAC while increasing LTV through better funnels, automation, and conversion-focused systems.
If your marketing feels complicated or unprofitable, following a proven framework can save both time and budget.
Practical CAC Example
- $2,000 Facebook Ads
- $500 content creation
- $200 software tools
- Total: $2,700
If this campaign brings in 30 customers, your CAC is: $2,700 / 30 = $90 per customer.
Conclusion
Understanding the cost of customer acquisition is a foundational step in building a profitable MMO or online business. Track your numbers, refine your funnels, and always optimize for ROI.
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