FA-101 · Module 2

Customer Acquisition Cost

3 min read

Customer Acquisition Cost — CAC — is the total cost of acquiring one new customer. Not the marketing cost. Not the ad spend. The total cost: marketing spend, sales compensation (including base salary, not just commission), sales tools, content production, event costs, and the allocated overhead of everyone involved in the acquisition process. Most companies undercount CAC by 30-50% because they exclude fully loaded sales costs. That undercount makes their unit economics look viable when they are not.

CAC = (Total Sales & Marketing Spend) / (New Customers Acquired)

Fully Loaded Example (Q1):
  Marketing spend:          $180,000
  Sales team compensation:  $320,000
  Sales tools & tech:        $40,000
  Content production:        $25,000
  Events & sponsorships:     $35,000
  ──────────────────────────────────
  Total S&M spend:          $600,000
  New customers acquired:         48
  ──────────────────────────────────
  CAC:                      $12,500

Do This

  • Include fully loaded sales compensation — base + commission + benefits + tools
  • Calculate CAC by channel to identify which acquisition paths are efficient
  • Track CAC trend over time — rising CAC with flat conversion signals a saturating market
  • Segment CAC by deal size — enterprise and SMB have different acquisition economics

Avoid This

  • Only count ad spend as CAC — that is marketing cost, not acquisition cost
  • Divide total spend by total customers including renewals — CAC is for new customers only
  • Ignore the time dimension — a customer acquired in January but closed in June still costs six months of nurture