Ways to measure your CAC (Customer Acquisition Cost).

  • Direct CAC includes all costs directly allocable to customers, such as marketing & commercial expenses and wages, their related operating costs, and dedicated capex … this computation can analyze different sales strategies;
  • Full CAC: here you need to add overhead expenses to direct costs. LTV has to be compared with full CAC;
  • Indirect CAC includes implicit costs like free trial periods or discounted setup fees. This metric is more useful when comparing different business models.
  • A16z introduced in a post the idea of Paid CAC, which is total acquisition cost divided by new customers acquired through paid marketing. Paid CAC thus excludes new subscribers reached through referral or expansion in your customers account. This KPI is more likely to show your ability to scale.
  • Another concern relates to potential cut-off issues — marketing expenses over a certain period of time can lead to subscriptions on the next ones.

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VC & Founder @techmind. Venture Capital as a Service

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David Domingues

David Domingues

VC & Founder @techmind. Venture Capital as a Service