What is CAC (Customer Acquisition Cost)?

CAC is one of the most critical metrics for growth-stage companies. A rising CAC often signals market saturation, increased competition, or inefficient marketing channels. Blended CAC includes all customers (organic and paid), while paid CAC isolates only those acquired through paid channels—the distinction matters because organic acquisition is essentially free.

CAC varies dramatically by industry and acquisition channel. Enterprise SaaS companies might spend $10,000-50,000 per customer due to long sales cycles and dedicated account executives. Consumer apps might spend $1-20 per user through digital advertising. The key is whether the CAC is recoverable through customer revenue within a reasonable payback period.

In case interviews, CAC analysis appears frequently in marketing strategy and startup evaluation cases. If a company's CAC is rising faster than LTV, the business model is deteriorating. Solutions might include optimizing channel mix, improving conversion funnels, investing in organic growth (content marketing, referrals), or focusing on higher-value customer segments.