Customer Acquisition Cost (CAC)

The total sales and marketing spend required to win one new customer.

Example

Spending 120,000 on sales and marketing to win 100 customers is a CAC of 1,200.

CAC means little alone; compare it with the gross profit a customer generates and how long they stay.

CAC Payback Period — The number of months of gross profit from a customer needed to recover the cost of acquiring them.
Gross margin — Gross profit - revenue less the cost of goods sold - expressed as a percentage of revenue. It asks whether the thing being sold makes money.

Consumer businesses live or die on acquisition cost and repeat purchase - and some questions apply everywhere — Consumer companies depend on the relationship between customer lifetime value and acquisition cost, brand and channel. Across all sectors, unit economics, retention, capital needs and time to revenue are the questions that travel. (12 min)
Retention and unit economics say more than the growth chart — Growth can be bought. Retention shows whether customers get lasting value, and unit economics show whether each customer is worth what it costs to win. (13 min)
Product-market fit shows up in behaviour, not in enthusiasm — Product-market fit means a specific group of customers needs the product badly enough to keep using it, pay for it and recommend it. It is visible in retention and organic demand, not in praise. (10 min)
Each customer must be worth more than it costs to win — Unit economics compare what a single customer or order contributes with what it costs to acquire and serve. Growth only creates value when those numbers work. (11 min)