Customer Acquisition Cost, or CAC, is simply the total amount you spend to get one new customer. If you run Facebook ads, offer discounts, or do any form of marketing, all those costs add up. Divide that total by the number of new customers you gained, and you get your CAC. For example, if you spent $500 on ads and got 10 new customers, your CAC is $50 per customer.
Why does this matter? If your CAC is higher than what a customer actually spends with you, you're losing money on every sale. The goal is to keep CAC as low as possible through targeted marketing, quality content, and smart offers. At the same time, focus on customer retention — a returning customer costs nothing to acquire again, which dramatically improves your overall profitability.