CAC (Customer Acquisition Cost) is calculated by dividing total sales and marketing spend over a period by the number of new customers gained in that same period. It sounds simple, but getting it right requires including every real cost involved — ad spend, sales salaries, promotional discounts, referral bonuses — not just the obvious media buy, or the number will understate how expensive growth actually is.

CAC only means something in relation to what a customer is actually worth (see Lifetime Value) — a high CAC can be perfectly healthy if customers stick around and pay for years, and a low CAC can still sink a company if those customers churn out almost immediately. Founders also distinguish “blended CAC” (average across all channels) from channel-specific CAC, since some acquisition channels are far more efficient than others and blending them together can hide which spending is actually working.

A rising CAC over time is one of the most common signs that a market is getting more competitive or that a company’s easiest, cheapest customers have already been acquired — a pattern nearly every growing consumer app eventually runs into.

🇵🇭 Philippine Example

The Philippines' e-wallet and ride-hailing markets — led by players like GCash, Maya, Grab, and Angkas — are widely known locally for heavy promotional spending (cashback, referral bonuses, fare discounts) to win users in a crowded, price-sensitive market, though none of these companies has publicly disclosed an exact customer acquisition cost figure. This is written as a general market pattern rather than a specific number, since no company-disclosed CAC figure for a Philippine startup could be confirmed through search.

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