The total cost to acquire a new paying customer, including all marketing and sales expenses, salaries, overhead, and ad spend over a specific period.
Why it matters: CAC determines the fundamental scalability of your growth model. If it costs more to acquire a customer than they generate in profit, the business model is structurally flawed.
In practice: If a company spends $10,000 on sales and marketing in a month and acquires 100 new customers, their CAC is $100. This must be compared against the customer's lifetime value.