# Customer Acquisition Cost

*Startups & Venture Capital — Finicade finance glossary*

CAC is total sales and marketing spend divided by new customers acquired in a period. The honest version is fully loaded — salaries, tools, commissions, not just ad spend — and separates paid from organic, since blending them hides a paid channel that doesn't work. CAC payback period, the months of gross profit needed to recover it, is now watched more closely than the LTV/CAC ratio.

**Formula:** `CAC = Sales & marketing spend ÷ New customers acquired`

**Also known as:** CAC, cost per acquisition, blended CAC

**Related terms:** [Customer Lifetime Value](https://finicade.com/glossary/customer-lifetime-value), [Unit Economics](https://finicade.com/glossary/unit-economics), [Churn Rate](https://finicade.com/glossary/churn-rate), [Rule of 40](https://finicade.com/glossary/rule-of-40), [Cohort Analysis](https://finicade.com/glossary/cohort-analysis)

Source: https://finicade.com/glossary/customer-acquisition-cost