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Episode #3 Customer Acquisition Cost (Language of Business)

To put it in the simplest terms possible, a customer acquisition cost, or CAC, is the cost associated with convincing a consumer to purchase a product or service. This can include marketing, research, and advertising. If you refuse to spend any money towards customer acquisition, there is no possibility of growing your revenue.

On the flip side, if you spend too much on customer acquisition, you may not bring in any more money because it is all being funneled back into growth. For example, if it costs $70 to make the product and it is sold for $100, if you spend more than $30 in acquisition costs, you will lose money.