Customer Acquisition Cost (CAC) is calculated by dividing all the Sales and Marketing costs involved to acquire a new customer within a certain timeframe. To get your customer acquisition cost (CAC), divide all sales and marketing costs by the number of customers acquired over a given time period. CAC is an important metric for growing companies to determine profitability and efficiency.

CAC = (total cost of sales and marketing) / (# of customers acquired)

A simple example would be, if Tommy spent $10 to market his lemonade stand and got 10 people to buy his product in a 1 week time period, his cost of acquisition for that week is $1.00.