Customer Acquisition Cost (CAC): The Number Behind Profitable Growth
CAC is what it costs to win one new customer. Here's how to calculate it, why the LTV:CAC ratio matters, and how to bring CAC down.
What CAC tells you
Customer acquisition cost (CAC) is the total sales and marketing spend divided by the number of new customers it won. It's the clearest measure of how efficiently you grow. The free CAC Calculator computes it in one step.
The formula
CAC = total sales + marketing spend ÷ new customers acquired in the same period. Spend AED 50,000 and win 100 customers, and your CAC is AED 500.
CAC vs lifetime value
CAC only makes sense beside customer lifetime value. If you spend AED 500 to acquire a customer worth AED 1,800, that's a healthy 3.6:1 ratio. If CAC creeps toward CLV, growth stops being profitable. Calculate the other side with the CLV Calculator.
Lowering CAC
- Improve conversion so the same spend wins more customers.
- Lean into channels with the best return — check them with the ROI Calculator.
- Boost referrals and retention to reduce reliance on paid acquisition.