A “good” CAC varies by industry, business model, and pricing strategy. However, in most cases, a 3:1 LTV to CAC ratioindicates strong unit economics.

Why does CAC increase over time?

As competition grows, ad costs rise and markets mature. It’s common for CAC to increase if acquisition strategies are not optimized or diversified.

Is CAC only for paid marketing?

No. CAC includes all acquisition costs — paid and organic. This includes salaries, tools, agency fees, and overhead related to attracting new customers.

How can startups lower CAC quickly?

Startups can focus on organic channels such as SEO, partnerships, and referrals while using precise audience targeting to avoid wasted ad spend.

What is the difference between CAC and CPA?

CAC measures the cost of acquiring a customer, while CPA (Cost Per Acquisition) can refer to the cost of any conversion event, such as a lead or sign-up. CAC focuses specifically on paying customers.

Customer Acquisition Cost (CAC)

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