Definition
The total cost of sales and marketing efforts required to acquire a single new customer over a given period. It is calculated by dividing total acquisition spend by the number of new customers acquired. PMs care about CAC because feature decisions -- self-serve onboarding, viral loops, freemium tiers -- directly influence how cheaply the company can grow.
Why It Matters for Product Managers
Understanding cac is critical for product managers because it directly influences how teams prioritize work, measure progress, and deliver value to users. PMs care about CAC because feature decisions -- self-serve onboarding, viral loops, freemium tiers -- directly influence how cheaply the company can grow. Without a clear grasp of this concept, PMs risk making decisions based on assumptions rather than evidence, which can lead to wasted engineering effort and missed market opportunities.
How It Works in Practice
Product teams measure and act on this metric by first establishing a baseline, then setting targets tied to product or business objectives. The typical workflow involves:
By embedding cac into regular team rituals, PMs keep the conversation grounded in evidence and catch problems before they compound.