← GlossaryUnit economics
CAC
Also known as · Customer Acquisition Cost
Total marketing + sales spend divided by new customers acquired.Customer acquisition cost (CAC) is the all-in cost to acquire one new customer — marketing spend, paid commissions, agency fees, content production, all included. CAC is meaningful only when compared to LTV; we target LTV-to-CAC of 3× or better on contribution margin for retainer businesses.
Related terms
Other unit economics terms.
LTV
Total value a customer delivers over the duration of their relationship.
AOV
Total revenue divided by total orders for a period.
MRR
Total predictable monthly subscription revenue across all active customers.
ARR
MRR multiplied by 12 — the annualized run rate of subscription revenue.
Churn Rate
Percentage of customers who cancel or fail to renew in a given period.
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