What Is CAC (Customer Acquisition Cost)? Meaning, Formula and Examples
CAC (Customer Acquisition Cost) explained in plain English: what it means, why it matters, how to calculate or apply it, a worked example and common mistakes.
CAC (Customer Acquisition Cost): The average cost to acquire one new customer. It tells you whether growth is affordable.
What CAC means
The average cost to acquire one new customer.
Why it matters
It tells you whether growth is affordable. Used alongside other metrics, it helps teams make better budget and strategy decisions.
How to calculate or apply it
CAC = total acquisition spend ÷ new customers
Worked example
₹2,00,000 spend for 400 customers gives CAC of ₹500.
Common mistake to avoid
Including repeat customers in the count.
Related terms
ROAS (Return on Ad Spend)
Revenue attributed to advertising divided by ad spend.
CTR (Click-Through Rate)
The percentage of impressions that lead to clicks.
CPC (Cost Per Click)
The average amount paid for each click.
CPM (Cost Per Mille)
The cost of 1,000 ad impressions.
Need help putting this into practice? Gravmo offers performance marketing. Get a proposal or message us on WhatsApp.
Frequently asked questions
Is CAC the same for every business?
No. Good values depend on your industry, margins, goals and data quality. Compare against your own history first.
Where can I see CAC?
Most values come from analytics, ad platforms, marketplace dashboards or your own sales records, depending on the metric.
Written and reviewed by Gravmo's marketing team. Read our editorial policy.
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