What is CAC?
CAC is a core concept in modern B2B revenue. Here is a clear, accurate definition, why it matters, and how Ardovo handles it.
Short answer
CAC, or customer acquisition cost, is the total sales and marketing spend required to acquire one new customer over a period. It is calculated by dividing all acquisition costs by the number of new customers won. CAC is fundamental to unit economics: a business must earn back CAC through customer revenue to be sustainable.
Key takeaways
- Total sales and marketing spend divided by new customers.
- Includes salaries, ads, tools, and overhead, not just ad spend.
- Must be recovered through customer revenue to be sustainable.
- Compared with LTV to judge business viability.
Why it matters
CAC is the price of growth. If it costs more to acquire a customer than that customer is worth, growth destroys value. Watching CAC keeps expansion economically sane.
How Ardovo handles it
Ardovo ties acquisition spend to closed deals by source, so you see true CAC by channel and segment, not a blended average. Rook highlights which sources produce customers below your target CAC.
Frequently asked questions
How is CAC calculated?
Add all sales and marketing costs over a period, including salaries, ads, tools, and overhead, then divide by the number of new customers acquired in that period. Fully loaded CAC gives the truest picture.
What is a good CAC?
There is no universal number; it depends on customer lifetime value. The common benchmark is an LTV to CAC ratio of at least 3 to 1, and CAC recovered within about twelve months.