CAC

CAC is the total cost of acquiring one new customer, calculated as total acquisition spend divided by the number of new customers acquired.

CAC tells you what it cost to get a customer. The catch is the answer changes depending on what you put in the numerator. A performance marketer might count only ad spend. Finance might add salaries, agency fees, tools and onboarding costs. Both are valid CAC numbers — they're just answering different questions, and comparing them across teams without agreeing on the definition first is how budget arguments start.

"Blended CAC" (all acquisition spend across every channel, divided by all new customers, regardless of channel) is the number that matches what actually left the bank account. "Paid CAC" or channel-level CAC (just Google Ads spend divided by customers from Google Ads) is useful for channel-by-channel budget decisions but will always look better than blended CAC, because organic, referral and word-of-mouth customers dilute the denominator without adding to the numerator.

CAC on its own is close to meaningless. A ₹2,000 CAC is expensive for a ₹500 product and cheap for a ₹50,000 one. Always read CAC next to LTV and payback period before deciding whether a number is good or bad.