📈 Metrics

Customer acquisition cost (CAC)

How much you spend to win one new customer.

Formula

CAC = Sales & marketing spend ÷ New customers

CAC adds up marketing and sales spend and divides it by the customers you actually won.

On its own CAC means little. Compare it with how much a customer is worth over their lifetime (LTV).

🧮 Example

An app spends ₹5 lakh on ads and gets 2,000 sign-ups who pay. CAC = ₹250.

🎯 Interview tip

Ask which channel the customers came from — blended CAC hides expensive channels.

Used in

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Lifetime value (LTV)

The total profit a customer brings before they leave.

LTV : CAC ratio

Is a customer worth more than it cost to get them?

Conversion rate

The share of people who take the next step.

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