John's company acquired 5,000 new customers last year. They spent $20,000 in marketing costs and $15,000 in sales costs. What is John's CAC?

John's company acquired 5,000 new customers last year. They spent $20,000 in marketing costs and $15,000 in sales costs. What is John's CAC?

• A. $6
• B. $5
• C. $7
• D. $8

Answer: (C)

Customer acquisition cost (CAC) is the amount a business spends to acquire each new customer. It is calculated by summing all costs tied to acquiring customers (often marketing plus sales) and dividing by the number of new customers gained. Here, marketing costs are 20,000 and sales costs are 15,000, totaling 35,000. With 5,000 new customers, CAC = 35,000 ÷ 5,000 = 7. That means it costs seven dollars per new customer. The other options would result from using different totals or different customer counts, but with these figures the CAC is seven dollars per customer.

Customer acquisition cost (CAC) is the amount a business spends to acquire each new customer. It is calculated by summing all costs tied to acquiring customers (often marketing plus sales) and dividing by the number of new customers gained.

Here, marketing costs are 20,000 and sales costs are 15,000, totaling 35,000. With 5,000 new customers, CAC = 35,000 ÷ 5,000 = 7. That means it costs seven dollars per new customer. The other options would result from using different totals or different customer counts, but with these figures the CAC is seven dollars per customer.