Concept / Term · Foundational

CAC

Customer Acquisition Cost

What does CAC mean?

The total sales and marketing spend divided by the number of new customers it produced.

Keep exploring

MRR / ARRPredictable subscription revenue, normalised to a month or a year. The headline number for any subscription business.
ChurnThe rate at which customers cancel over a period. Revenue churn weights this by how much each was paying, which matters more than the count.
LTV / CLVThe total revenue or profit expected from a customer across the whole relationship.
LTV:CAC RatioHow much a customer is worth against what they cost to win. Around 3:1 is the commonly cited healthy benchmark for subscription businesses.
Payback PeriodHow many months of a customer's revenue it takes to earn back what you spent winning them. Directly affects how much cash growth consumes.
NRRRevenue from existing customers this year against last, including upgrades, downgrades and cancellations. Above 100% means the existing base grows without any new customers.
ACV / TCVACV is what a contract is worth per year; TCV is its value over the full term.
FunnelThe stages people pass through from first awareness to purchase, narrowing at each step.