Customer acquisition cost is the total cost of acquiring a new customer, including marketing spend, sales time, referral bonuses, and any discounts offered. CAC is calculated by dividing total acquisition spending by the number of new customers gained in that period. A healthy business maintains a CLV-to-CAC ratio of at least 3:1 — meaning each customer generates at least three times what it cost to acquire them.
A pressure washing company spends $2,000 on Google Ads and $500 on yard signs in a month, gaining 25 new customers. Their CAC is $2,500 / 25 = $100 per customer. With an average job value of $350, the first job alone covers acquisition cost.
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