CAC

CAC (stands for: Customer Acquisition Cost) – the average cost of acquiring a customer. By calculating this ratio, we can determine whether a particular investment was profitable (whether its costs turned out to be lower than potential profits). To calculate CAC, for small businesses it is worth using a simplified model that includes all marketing expenses, which should be divided by the number of customers acquired over time. In this case, it is worth calculating the cost of customer acquisition separately for different channels – then we gain information on which channel is the most profitable. For big companies, the task is a bit more difficult: it is necessary to also consider the costs of salaries of marketing staff and advertising agencies, purchased materials and tools. In this case, the time frame should also be increased – CAC for large companies should be calculated on a quarterly basis.