GTM Glossary · Metrics
Customer Acquisition Cost (CAC)
The fully loaded cost of winning one new customer, including sales and marketing salaries, tooling, agencies, and campaign spend.
[01]What It Means
CAC is only meaningful when the inputs are stated. Blended CAC includes all customers; paid CAC isolates acquisition spend. In an entry market, the first quarters carry setup cost that should be amortised rather than charged to the first three deals.
[02]Why It Matters
CAC decides whether growth is fundable. Read next to lifetime value and payback, it separates a business that can scale spend from one that is buying revenue at a loss.
[03]Where It Goes Wrong
Excluding salaries, which understates CAC by the largest component.Comparing CAC across markets without adjusting for entry cost and cycle length.Cutting CAC by dropping senior involvement, which usually lowers win rate more than it saves.
[04]Related Terms