Unit Economics
Authoritative Source
Customer Acquisition Cost (CAC)
Total sales and marketing expenditure required to acquire a single net-new customer.
Detailed Definition & Corporate Finance Context
Customer Acquisition Cost (CAC) serves as a vital financial metric in corporate FP&A, treasury management, and institutional valuation. Governed by Unit Economics, monitoring Customer Acquisition Cost (CAC) allows CFOs and finance leaders to optimize capital allocation, refine financial forecasts, and communicate performance to investors.
In enterprise corporate FP&A models and ERP financial planning suites (Oracle NetSuite PBCS, SAP Analytics Cloud, Anaplan), tracking Customer Acquisition Cost (CAC) provides real-time visibility into operational margin efficiency and cost structure leverage.
Mathematical Standard & Equation
CAC = (Sales & Marketing Expenses) ÷ (New Customers Acquired)
Common Operational Pitfalls
- Conflating reported GAAP net income with cash flow generated from core operations.
- Failing to normalize non-recurring add-backs when calculating adjusted EBITDA metrics.
- Relying on static annual budgets rather than rolling 12-month FP&A forecasts.