CAC and unit economics
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Definition
CAC (Customer Acquisition Cost) is the average spend to acquire one customer: the whole acquisition budget over a period divided by the customers acquired in the same period. Unit economics sets CAC against LTV to check whether a customer pays back.
How to compute
CAC = acquisition spend / new customers in the period. The baseline ratio is LTV to CAC: a working target of three to one, with a CAC payback period usually under a year. Compute CAC per segment, or cheap organic traffic will mask a loss-making paid channel.
Pitfalls
Blending CAC across all channels means deciding on an average that exists in no single channel. If the numerator counts only ads while the denominator counts every source, CAC is understated. Use contribution margin, not revenue: on revenue, unit economics almost always looks falsely positive.