What is CAC (Customer Acquisition Cost)?

CAC (Customer Acquisition Cost) is the full cost to acquire one paying customer or user, including ads and adjacent spend. Broader than ad-account CPA: includes ops, creatives, tools.

Formula

CAC = (Ad spend + Marketing overhead) ÷ Number of new customers. “Customer” is business-defined: first purchase, FTD, activated subscriber.

CAC vs CPA

CPA in arbitrage is often ad spend ÷ offer conversions without overhead. CAC matches product unit economics. Tracker effective CPA ≈ minimum CAC when other costs are zero.

vs LTV

LTV/CAC > 3 is a SaaS rule of thumb; arbitrage needs LTV > CAC with acceptable payback. Gambling and rebill nutra need cohort LTV, not day-0.

Practice

Import cost, include holds and chargebacks in net CAC. Scale channels at stable CAC and rising LTV. Rising CAC at GEO saturation signals pivot.

See also: LTV, CPA, CPI, ROI.