How to really calculate CAC (Customer Acquisition Cost)

Are you including salaries? Overheads?

CAC = Total Marketing + Sales Expenses / # of New Customers Acquired , right?
Actually not. There is also a timeline between free to freemium. Are you including salaries? Overheads?
“A customer is a customer, right? Not necessarily. When it comes to calculating CAC, we need to distinguish between new and returning customers. In most organizations there are marketing and sales efforts focused on new customers, and there are marketing and sales efforts focused on retaining or getting customers back.”

Very interesting piece that questions the way CAC is calculated.

Leave a Reply

You May Also Like

Bootstrapping a startup via Consulting gigs ? The Big Question

Every startup requires cash. It’s not built on thin air as early stage investors think. Money for paying the lawyer, government fees, hiring developers and more importantly paying your rent, food, fuel, etc. An entrepreneur starts with a calculated risk of investing (or burning through) his savings for that 6 months period with an assumption that either a customer would start paying or an investor would bet on it.
View Post

7 Myths of Starting Up [I have an Idea, But Won’t Share it]

If only investors were like the Black and Yellow Mumbai cabs that you can hail and get into any time you want! No VC or Investor is waiting with bated breath biting her fingernails for you to call! It’s quite the opposite scene actually. In a booming Economy (like India), investors are deluged with lots of high quality and established business investment options, so you have to fight hard to get into the VC’s visitor’s area to begin with!
View Post