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Glossary · Growth

Customer Acquisition Cost (CAC)

CAC is the fully loaded cost of winning a customer, calculated by dividing acquisition spend by the number of customers gained in a period. It's only meaningful next to LTV: a healthy business earns several times more from a customer than it spent to acquire them, and recovers CAC quickly. Falling CAC or rising LTV both improve unit economics.

Related terms
Customer Lifetime Value (LTV)
The total revenue (or profit) a customer generates over their entire relationship with a product.
AARRR (Pirate Metrics)
A funnel of five growth stages: Acquisition, Activation, Retention, Referral, Revenue.
Go-to-Market (GTM)
The plan for how a product reaches and wins customers across channels and pricing.
Put the method into practice.
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