CAC (Customer Acquisition Cost)

Definition

How much you spend to gain one customer—a depressing metric that determines whether your unit economics work at all.

Example Usage

Our CAC is $500, but our customer lifetime value is $300, which means we're literally losing money on each paying customer.

Origin

Business metrics terminology; became essential to SaaS financial analysis.

Fun Fact

The best SaaS companies achieve CAC payback within 6-12 months; most startups never optimize this.

Source: SaaS and business metrics terminology

Related Terms

Intermediate

land grab

Aggressively pursuing market share and user growth at the expense of profitability or unit economics, betting that dominance now will create a moat later. It's monopoly thinking fueled by venture capital.

🚀 Startup / VC

Intermediate

secondary sale

Selling existing shares to other investors rather than the company issuing new shares, allowing early shareholders to get liquid without diluting anyone. The financial equivalent of sneaking out the back door.

🚀 Startup / VC

Advanced

mezzanine financing

Late-stage debt or hybrid securities used to bridge the gap between venture rounds and an exit. It's called mezzanine because it sits between the ground floor (equity) and penthouse (IPO).

🚀 Startup / VC

Intermediate

dilute

The art of watering down your ownership stake in a company, usually because someone with deeper pockets decided your equity pie needs more slices. In the startup world, this happens when new investors come aboard and everyone's percentage shrinks faster than your enthusiasm during Series D. It's not personal, it's just cap table mathematics.

🚀 Startup / VC

Beginner

Elevator Pitch

A 30-second summary of your startup that you deliver to investors in elevators, coffee lines, and restraining-order-adjacent proximity. If you can't explain your company in the time it takes to ride an elevator, your company is either too complicated or the elevator is too fast.

🚀 Startup / VC

Intermediate

secondary market

A marketplace where shareholders can sell their existing equity to other investors, providing liquidity before an IPO or acquisition. It's the emergency exit when waiting for an actual exit feels like waiting for Godot.

🚀 Startup / VC

Translate This Term

See “CAC (Customer Acquisition Cost)” in Corporate Speak, Gen-Z Slang, Pirate Speak, and more.

Try the Translator

Share This Term

Post on X Share on Facebook Share on LinkedIn

Discover a Term

Beginner

acquitted

When a judge or jury officially declares someone not guilty, sending them home with a legally binding "our bad" after wh...