CAC

CAC- Customer Acquisition Cost.

CAC is the cost associated in convincing a customer to buy a product/service. This cost is incurred by the organization to convince a potential customer. This is an important business metric. It plays a major role in calculating the value of the customer to the company and the resulting return on investment (ROI) of acquisition.

The calculation of customer valuation helps a company decide how much of its resources can be profitably spent on a particular customer. In general terms, it helps to decide the worth of the customer to the company.

Numerically, customer acquisition cost is typically expressed as a ratio — dividing the sum total of CAC by the number of additional patrons acquired by the business as a result of the customer acquisition strategy.

Startup Unit Economics and Financial Model By Austin Neudecker ( LinkedIn Learning)

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