# What is customer acquisition cost (CAC)? > Customer acquisition cost is what you spend in sales and marketing to win one new customer. Learn the formula in plain words and what to count in it. Source: https://learn.ynteractive.com/content/glossary/customer-acquisition-cost · Updated 2026-10-06 · Free from Stepthrough (https://learn.ynteractive.com) [Business](https://learn.ynteractive.com/content/glossary#topic-business) · [AI glossary](https://learn.ynteractive.com/content/glossary) Quick answer Customer acquisition cost, or CAC, is the total you spend on sales and marketing in a period divided by the number of new customers you won in that period. It answers a simple question: on average, what did each new customer cost us to get? Last updated October 6, 2026 Updated October 6, 2026 · By [Robert Breen](https://learn.ynteractive.com/content/about) ## Why it matters for a small business Marketing feels cheap when you look at one ad or one tool, and expensive when the bills arrive together. CAC adds it all up and ties it to results. If ad spend doubles but new customers only rise a little, CAC tells you the extra money bought less. If a new channel brings customers at a lower cost, CAC shows that too. The number is most useful next to [customer lifetime value](https://learn.ynteractive.com/content/glossary/customer-lifetime-value). A customer who costs more to win than they will ever bring in is a loss, however exciting the growth looks. Be honest about what goes in: ad spend, tools, agency fees and the share of salaries spent on selling all count. Leaving out people's time makes CAC look better than it is. ## In a real lesson: n8n AI Agent Tutorial: Save Social Media Ideas to Google Sheets In the [AI Social Media Idea Agent lesson](https://learn.ynteractive.com/content/n8n-ai-agent-tutorial-google-sheets), BrightPath Marketing, a made-up digital marketing agency, helps clients with "SEO, paid advertising, social media marketing, and website design." The agent writes post ideas that end with calls to action like "Send us a message." Every one of those channels has a cost, and CAC is how an agency or its client judges whether the spend paid off. Here is a made-up example. Say a client spends 3,000 dollars in a month on ads, plus 1,000 dollars of agency fees and staff time, and wins 20 new customers that month. Their CAC is 4,000 dollars divided by 20, or 200 dollars per customer. These figures are invented for illustration only. The lesson also shows a small, real cost. It notes that the AI model charges "per request, not per month," and that a run costs fractions of a cent. AI tools are part of the marketing budget too, so they belong in the CAC total, even when they are tiny next to ad spend. [Try this lesson free](https://learn.ynteractive.com/modules/n8n-ai-agent) or [read the step-by-step guide](https://learn.ynteractive.com/content/n8n-ai-agent-tutorial-google-sheets). ## Common confusions ### CAC vs cost per lead Cost per lead divides spend by the number of leads. CAC divides by paying customers. Cheap leads that never buy can hide a high CAC. ### Blended CAC vs channel CAC Blended CAC uses all spend and all new customers. Channel CAC looks at one source, like paid search. Blended is simpler. Channel CAC is what tells you where to move money. ## Tips - Pick a period, like a month or quarter, and count spend and new customers over the same dates. - Track where each customer came from, for example with [UTM parameters](https://learn.ynteractive.com/content/glossary/utm-parameters), so you can work out CAC per channel. - Lower CAC by improving conversion, not only by cutting spend. A better form or follow-up can win more customers from the same budget. ## Related terms [Customer lifetime value (CLV)](https://learn.ynteractive.com/content/glossary/customer-lifetime-value) · [Conversion rate](https://learn.ynteractive.com/content/glossary/conversion-rate) · [UTM parameters](https://learn.ynteractive.com/content/glossary/utm-parameters) · [Return on investment (ROI)](https://learn.ynteractive.com/content/glossary/return-on-investment) · [KPI (key performance indicator)](https://learn.ynteractive.com/content/glossary/kpi) · [Upsell](https://learn.ynteractive.com/content/glossary/upsell) ## More Business terms [Customer churn](https://learn.ynteractive.com/content/glossary/customer-churn) · [Customer onboarding](https://learn.ynteractive.com/content/glossary/customer-onboarding) · [Data processing agreement (DPA)](https://learn.ynteractive.com/content/glossary/data-processing-agreement) · [Data retention policy](https://learn.ynteractive.com/content/glossary/data-retention-policy) ## Where you use it: free lessons - [n8n AI Agent Tutorial: Save Social Media Ideas to Google Sheets](https://learn.ynteractive.com/content/n8n-ai-agent-tutorial-google-sheets) (n8n, 12 min) - [Build an n8n AI Agent That Plans Your Content Calendar](https://learn.ynteractive.com/content/n8n-ai-agent-content-calendar) (n8n, 12 min) ## Frequently asked questions **Should salaries be part of CAC?** Usually yes, at least the share of time spent on selling and marketing. Some teams report CAC with and without salaries. Just be consistent from one period to the next. **What is a good CAC?** There is no universal number. What matters is how CAC compares with what a customer is worth to you and how long it takes to earn the cost back. [All AI glossary terms, A to Z](https://learn.ynteractive.com/content/glossary) · [Free prompt templates](https://learn.ynteractive.com/content/prompts)