CAC
Paid MediaAlso: Customer Acquisition Cost
Quick definition
CAC stands for customer acquisition cost. It's the total amount you spend to acquire one new customer, including ad spend, sales salaries, tools, content production and any other dollar that touched the acquisition. Calculated as all acquisition costs divided by new customers in the period.
Compare to your LTV. The ratio is the answer, not the absolute number. Healthy ranges differ by industry. See Atlas for shape.
How it varies across Australia
CAC sits above CPA for every business that has people, tools and content in the acquisition path, which is most businesses. The gap is usually biggest for B2B and smallest for direct-response ecommerce.
See acquisition economics across Australian industries →What it actually means
CAC is the honest cousin of CPA. CPA counts what the ad platform charged you. CAC counts everything you spent to turn a stranger into a customer.
The maths is the same shape: spend on top, customers on the bottom. The argument is what counts as 'spend'. Strict CAC includes sales salaries, marketing tools, content production, agency retainers, the proportion of your time the founder spent on outbound. Loose CAC includes ad spend only and rebrands itself CPA.
Most Australian businesses report loose CAC because the strict number is worse. Loose CAC is fine for channel-level optimisation. Strict CAC is the one you need to set price points, hire plans and runway.
CAC is the number you can't lie to yourself about. It includes the salaries, the software, the agency, and the dinners.
How to calculate it
CAC = All acquisition costs ÷ New customers acquired
Worked example. Last quarter you spent $12,000 on ads, paid $4,000 in sales salaries, $1,500 in tools and $500 on content. Acquired 42 new customers. CAC = $18,000 ÷ 42 = $429.
The Australian context
Australian payroll tax, superannuation and tools-in-AUD all push CAC higher than the equivalent US number. Australian businesses competing internationally on thin margins often misread their position because they're benchmarking against US-reported CAC ranges that don't include the same cost structure.
If you're publishing CAC in a board pack, document the inclusions and stick with them. Quarter-to-quarter CAC comparisons fall apart fast when the denominator definition wanders.
Where people get this wrong
CAC vs CPA
| CAC | CPA | |
|---|---|---|
| What it counts | All-in cost of acquiring a customer | Spend attributable to ads only |
| Always | Larger or equal | Smaller or equal |
| Used to judge | Full unit economics, runway | Ad channel efficiency |
| Reportable to a board | Yes | Useful for marketing only |
Related terms
Common questions
What is a healthy CAC for an Australian business?
Healthy CAC is whatever makes LTV:CAC at least 3:1 with enough margin to fund growth. The absolute number doesn't matter without an LTV to compare against. Australian labour costs make CAC structurally higher than US peers.
How do I calculate CAC properly?
Sum every dollar that touched acquisition over a period: ad spend, marketing tools, sales salaries with on-costs, agency fees, content production, events. Divide by net new customers acquired in the same period. Use a rolling 12-month window for planning.
Should CAC include the founder's time?
If the founder is doing material acquisition work, yes. Allocate a fair share of their cost. Skipping this is the most common reason early-stage CAC looks artificially low.
How is CAC different from payback period?
CAC is the cost. Payback period is how long it takes for the customer's gross profit to repay that cost. CAC of $400 with a 6-month payback is very different from CAC of $400 with an 18-month payback.
Keep exploring
About New Rebellion
New Rebellion is a marketing intelligence consultancy. We build tools, score Australian businesses on how their marketing actually performs, and publish Debrief every day. This dictionary is part of how we work in the open.
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