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DEFINITIONBusiness

CAC

Customer Acquisition Cost

The average amount you spend to get one new paying customer. Take everything spent on getting customers in a period — ads, tools, the salaries of people doing it — and divide by the number of customers that period produced.

EXAMPLE

You spend ₹50,000 on ads and outreach in a month and gain 25 paying customers. Your CAC is ₹2,000.

WHY IT MATTERS

It's half of the only equation that decides whether marketing helps or hurts. If CAC is higher than what a customer is eventually worth to you, every new customer makes the business smaller.

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