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How do you win your customer’s over? And at what price? Here’s a simple formula: Customer Acquisition Cost (CAC) = Total Sales and Marketing Expenses / Number of new customers acquired during a specific period. Simple, right? Just plug in some figures. CAC measures the cost of converting potential leads into customers, determining profitability. For example, let’s say you spend $10,000 in the past month to acquire new customers in marketing, sales, salaries and overhead costs. You had 1000 purchases from new customers. Therefore, your CAC will be $10.
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