CAC (Client Acquisition Cost)
You're spending on marketing and time on sales. How much does it cost to acquire one new client? CAC (client acquisition cost) is the total cost to acquire one new client—marketing spend, sales time, tools, and any other cost that goes into winning that client. Understanding this number helps you decide when to raise prices and which clients are actually profitable. If your lifetime value is high, you can afford a higher CAC; if CAC is eating your margin, you need to improve conversion, retention, or referral marketing.
Same pipeline, different CAC. A founder who spends $2k/month on ads and closes 2 clients has a CAC of $1k. One who gets 4 clients from referral marketing and spends $200 on a referral tool has a CAC of $50. Lower CAC = more margin and more scalable growth. Track CAC so you know which channels and offers are efficient. LTV:CAC ratio (lifetime value to CAC) is the health check—rule of thumb 3:1 or better.
Total cost to acquire one new client. Track it so you know what growth actually costs.
How to use it
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Calculate it. Sum all acquisition spend (ads, tools, your time at your hourly equivalent, etc.) over a period. Divide by new clients in that period. That's your CAC. Do it by channel if you can (e.g. CAC from referrals vs. paid).
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Compare to lifetime value. If a client is worth $10k over the relationship and CAC is $2k, you're in good shape. If CAC is $8k and they churn after one project, you're losing money. Client retention strategy and referral marketing improve unit economics.
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Use it for pricing and positioning. If CAC is high, either raise prices (value pricing) so you can afford it, or invest in lower-CAC channels (referrals, niche positioning for inbound).