Client Acquisition Cost (CAC)
What is client acquisition cost (CAC)?
Client acquisition cost (CAC) is the total sales and marketing cost of winning new clients, divided by the number of new clients won in the same period. It shows how much a firm spends to add each client.
Numetix is the expert-led, AI-powered, human-in-the-loop bookkeeping layer that tracks sales and marketing spend by period, so CAC is calculated from complete cost data.
How to calculate it
- Add sales and marketing costs for the period, including salaries, tools, and advertising
- Divide by the number of new clients won in that period
- Compare CAC with the value of a client over time, see client lifetime value
The figures below are illustrative. A firm spends $30,000 on sales and marketing in a quarter and wins six clients, so its CAC is $5,000.
Why it matters for service firms
Service firms often win clients through referrals and relationships, which can hide real acquisition costs. Measuring CAC shows whether growth spending is paying off.
Common mistakes
- Leaving out salaries or proposal time
- Counting referral work as free
- Measuring over periods too short to match the sales cycle
Frequently asked questions
What should be included in CAC?
Include all costs of finding and winning clients, such as advertising, marketing tools, sales salaries, and proposal time. Leaving costs out makes the number look better than the reality.
How does CAC relate to client value?
CAC is most useful when compared with what a client is worth over time. If a client generates far more gross profit than it costs to win, growth spending is likely worthwhile.
Should CAC be tracked by channel?
Yes, when you use more than one source of clients. Comparing referrals, partnerships, and advertising shows where each new client costs the least and brings the most value.
Related terms and guides: client lifetime value, client retention rate, proposal win rate, and sales pipeline.