{"id":466,"date":"2026-04-01T12:00:01","date_gmt":"2026-04-01T00:00:01","guid":{"rendered":"https:\/\/taos.service2client.biz\/index.php\/2026\/04\/01\/understanding-the-customer-acquisition-cost-cac\/"},"modified":"2026-04-01T12:00:01","modified_gmt":"2026-04-01T00:00:01","slug":"understanding-the-customer-acquisition-cost-cac","status":"publish","type":"post","link":"https:\/\/taos.service2client.biz\/index.php\/2026\/04\/01\/understanding-the-customer-acquisition-cost-cac\/","title":{"rendered":"Understanding the Customer Acquisition Cost (CAC)"},"content":{"rendered":"<div class=\"dp-print-host\" style=\"text-align:right; margin-bottom:18px;\">  <button type=\"button\" onclick=\"(function(){var el=document.querySelector('.dp-print-only');if(el&&el.parentNode!==document.body){document.body.appendChild(el);}window.print();})();\" aria-label=\"Print this article\" style=\"display:inline-block; padding:5px 14px; background:#f8f9fa; border:1px solid #ddd; border-radius:14px; color:#555; font-size:0.85em; font-weight:600; cursor:pointer; line-height:1.4;\"><span aria-hidden=\"true\">\ud83d\udda8<\/span> Print<\/button><\/div><div class=\"dynamic-post-reading-time\" role=\"note\" aria-label=\"Estimated reading time: 3 minutes\" style=\"display:inline-block; margin:0 0 18px 0; padding:5px 12px; background:#f0f7ff; border:1px solid #cfe0f5; border-radius:14px; color:#337ab7; font-size:0.85em; font-weight:600; line-height:1.4;\"><span aria-hidden=\"true\">\u23f1 <\/span>3 min read<\/div><div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div><p>The Customer Acquisition Cost (CAC) measures how much a company spends to obtain new, additional customers. Oftentimes, this calculation is used with the customer lifetime value (LTV) metric, that also projects the customer&rsquo;s profitability to calculate the newly acquired customer&#8217;s value.<\/p>\n<p>It&#8217;s primarily used to measure a business&#8217; sales and marketing departments to figure out their profitability, profit margin and return on investment figures.<\/p>\n<p class=\"c2carticlesubtitle\"><strong>How to Calculate<\/strong><\/p>\n<p>CAC = Sales and Marketing Expense \/ Number of New Customers<\/p>\n<p>Examples of the expenses include product and service promotion expenditures, special compensation and commissions, regular wage payments and operating expenses.<\/p>\n<p>The tally of newly acquired customers is simply how many new, unique contracts the business acquired. It&#8217;s important to keep the expenses and customer acquisition numbers consistent over the same periods.<\/p>\n<p class=\"c2carticlesubtitle\"><strong>Why It&#8217;s Important <\/strong><\/p>\n<p>Business owners and their managers, along with investors, can look at sales and marketing efforts from the return on investment of their expenditures and outcomes. For example, there could be multiple channels that sales and marketing took to obtain new customers over a quarter, half-year or 12-month period (such as email marketing, social media marketing, conferences, etc.). Based upon each channel, the customer acquisition cost is determined by dividing the financial outlay per customer acquired.<\/p>\n<p>From there, each channel can be analyzed to see which one works well and, equally important, which ones don&#8217;t work well and should either be discontinued or modified. Internal stakeholders and external investors (both existing and potential) can look at trends to see how ongoing efforts may be working and if existing management is productive or needs to be replaced with more competent individuals.<\/p>\n<p class=\"c2carticlesubtitle\"><strong>Accounting Considerations<\/strong><\/p>\n<p>Based on FASB&#8217;s Accounting Standards Codification 340-40, businesses are required to document and capitalize incremental costs of securing new customer business if the related expenses are projected to be recouped.<\/p>\n<p>An incremental cost in the scope of obtaining a contract is a cost an entity incurs to obtain a contract that wouldn&#8217;t have been incurred if the contract hadn&#8217;t been obtained.<\/p>\n<p>While a sales commission (be it fixed or a percentage of a new contract) may be considered an eligible incremental cost to one of its employees, it&#8217;s not necessarily always the case. Rather, the true test of whether an incremental cost is capitalizable depends on the subjective interpretation of if a mandated financial expenditure for an incremental cost is attributed to signing a contract with a new customer.<\/p>\n<p>The following sample situations often require more investigation to determine whether the capitalization of costs is applicable:<\/p>\n<ul>\n<li>Equity issuances based upon meeting production and essential function goals<\/li>\n<li>Employee compensation according to previous years&#8217; executed contracts<\/li>\n<li>Sales commissions allocated over multiple timeframes and\/or to more than one employee for a single contract<\/li>\n<\/ul>\n<p>ASC 340-40 also stipulates the amortization schedule of capitalization costs of obtaining a customer contract on a scheduled timeline that follows the delivery to the customer of the contracted goods or services.<\/p>\n<p class=\"c2carticlesubtitle\"><strong>Conclusion<\/strong><\/p>\n<p>While the customer acquisition cost may be straightforward, when it comes to subjective cases, businesses that have experience with murkier situations are able to make the most of their subjective sales and marketing expenses when navigating the tax and accounting landscape.&nbsp;<\/p>\n<div class=\"dp-print-only\" style=\"display:none;\">  <div class=\"dp-print-header\" style=\"border-bottom:2px solid #000; padding-bottom:10px; margin-bottom:20px;\"><h1 style=\"margin:0; font-size:24px; font-weight:bold;\">Vacation Dreams<\/h1>  <\/div>  <h1 class=\"dp-print-title\" style=\"margin:0 0 10px 0; font-size:22px;\">Understanding the Customer Acquisition Cost (CAC)<\/h1>  <p class=\"dp-print-meta\" style=\"margin:0 0 20px 0; font-size:11px; color:#555;\">    April 1, 2026 &nbsp;&middot;&nbsp; Accounting News, Blog  <\/p>  <div class=\"dp-print-body\"><div class=\"dynamic-post-reading-time\" role=\"note\" aria-label=\"Estimated reading time: 3 minutes\" style=\"display:inline-block; margin:0 0 18px 0; padding:5px 12px; background:#f0f7ff; border:1px solid #cfe0f5; border-radius:14px; color:#337ab7; font-size:0.85em; font-weight:600; line-height:1.4;\"><span aria-hidden=\"true\">\u23f1 <\/span>3 min read<\/div><div style=\"margin-top: 0px; margin-bottom: 0px;\" class=\"sharethis-inline-share-buttons\" ><\/div><p>The Customer Acquisition Cost (CAC) measures how much a company spends to obtain new, additional customers. Oftentimes, this calculation is used with the customer lifetime value (LTV) metric, that also projects the customer&rsquo;s profitability to calculate the newly acquired customer&#8217;s value.<\/p>\n<p>It&#8217;s primarily used to measure a business&#8217; sales and marketing departments to figure out their profitability, profit margin and return on investment figures.<\/p>\n<p class=\"c2carticlesubtitle\"><strong>How to Calculate<\/strong><\/p>\n<p>CAC = Sales and Marketing Expense \/ Number of New Customers<\/p>\n<p>Examples of the expenses include product and service promotion expenditures, special compensation and commissions, regular wage payments and operating expenses.<\/p>\n<p>The tally of newly acquired customers is simply how many new, unique contracts the business acquired. It&#8217;s important to keep the expenses and customer acquisition numbers consistent over the same periods.<\/p>\n<p class=\"c2carticlesubtitle\"><strong>Why It&#8217;s Important <\/strong><\/p>\n<p>Business owners and their managers, along with investors, can look at sales and marketing efforts from the return on investment of their expenditures and outcomes. For example, there could be multiple channels that sales and marketing took to obtain new customers over a quarter, half-year or 12-month period (such as email marketing, social media marketing, conferences, etc.). Based upon each channel, the customer acquisition cost is determined by dividing the financial outlay per customer acquired.<\/p>\n<p>From there, each channel can be analyzed to see which one works well and, equally important, which ones don&#8217;t work well and should either be discontinued or modified. Internal stakeholders and external investors (both existing and potential) can look at trends to see how ongoing efforts may be working and if existing management is productive or needs to be replaced with more competent individuals.<\/p>\n<p class=\"c2carticlesubtitle\"><strong>Accounting Considerations<\/strong><\/p>\n<p>Based on FASB&#8217;s Accounting Standards Codification 340-40, businesses are required to document and capitalize incremental costs of securing new customer business if the related expenses are projected to be recouped.<\/p>\n<p>An incremental cost in the scope of obtaining a contract is a cost an entity incurs to obtain a contract that wouldn&#8217;t have been incurred if the contract hadn&#8217;t been obtained.<\/p>\n<p>While a sales commission (be it fixed or a percentage of a new contract) may be considered an eligible incremental cost to one of its employees, it&#8217;s not necessarily always the case. Rather, the true test of whether an incremental cost is capitalizable depends on the subjective interpretation of if a mandated financial expenditure for an incremental cost is attributed to signing a contract with a new customer.<\/p>\n<p>The following sample situations often require more investigation to determine whether the capitalization of costs is applicable:<\/p>\n<ul>\n<li>Equity issuances based upon meeting production and essential function goals<\/li>\n<li>Employee compensation according to previous years&#8217; executed contracts<\/li>\n<li>Sales commissions allocated over multiple timeframes and\/or to more than one employee for a single contract<\/li>\n<\/ul>\n<p>ASC 340-40 also stipulates the amortization schedule of capitalization costs of obtaining a customer contract on a scheduled timeline that follows the delivery to the customer of the contracted goods or services.<\/p>\n<p class=\"c2carticlesubtitle\"><strong>Conclusion<\/strong><\/p>\n<p>While the customer acquisition cost may be straightforward, when it comes to subjective cases, businesses that have experience with murkier situations are able to make the most of their subjective sales and marketing expenses when navigating the tax and accounting landscape.&nbsp;<\/p>\n<\/div>  <hr style=\"margin-top:30px;\">  <div class=\"dp-print-disclaimer\" style=\"font-size:10px; color:#555; margin-top:10px;\"><p>Disclaimer&nbsp;<img id=\"s2cdisclaimer_toggle_plusarticle\" src=\"https:\/\/www.dynamicontent.net\/images\/icon-toggle-on.gif\" width=\"12\" height=\"12\" alt=\"\" style=\"vertical-align:middle;\" border=\"0\" \/><img id=\"s2cdisclaimer_toggle_minusarticle\" src=\"https:\/\/www.dynamicontent.net\/images\/icon-toggle.gif\" width=\"12\" height=\"12\" alt=\"\" style=\"vertical-align:middle;display:none;\" border=\"0\" \/><\/p><div  id=\"s2cdisclaimerarticle\" style=\"display:none;\"><p class=\"s2csmaller\">These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. <a rel=\"nofollow\" href=\"https:\/\/www.service2client.com\" target=\"_blank\">Service2Client LLC<\/a> is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact a professional regarding the topics in these articles. The images linked to these articles are protected by copyright and should not be copied for any reason.<\/p><p><a rel=\"nofollow\" href=\"http:\/\/www.copyscape.com\/plagiarism-finder\/\"><img src=\"https:\/\/www.dynamicontent.net\/images\/cs-wh-3d-234x16.gif\" alt=\"Protected by Copyscape Plagiarism Finder\" title=\"Protected by Copyscape Plagiarism Checker - Do not copy content from this page.\" width=\"234\" height=\"16\" border=\"0\" \/><\/a><\/p><\/div><script type=\"text\/javascript\">jQuery(\"document\").ready(function(){jQuery(\"#s2cdisclaimer_toggle_plusarticle\").click(function(){jQuery('#s2cdisclaimerarticle').show();jQuery(this).hide();jQuery('#s2cdisclaimer_toggle_minusarticle').show();});});jQuery(\"document\").ready(function(){jQuery(\"#s2cdisclaimer_toggle_minusarticle\").click(function(){jQuery('#s2cdisclaimerarticle').hide();jQuery('#s2cdisclaimer_toggle_plusarticle').show();jQuery(this).hide();});});<\/script><\/div><\/div><style>@media screen { .dp-print-only { display: none !important; } }@media print {  body > *:not(.dp-print-only) { display: none !important; }  .dp-print-only {    display: block !important;    width: 100%;    background: #fff;    color: #000;    font-family: Georgia, serif;    font-size: 12pt;    line-height: 1.5;    margin: 0;    padding: 0;  }  .dp-print-body img {    max-width: 50% !important;    height: auto !important;    display: block;    margin: 10px auto;  }  .dp-print-body h1, .dp-print-body h2, .dp-print-body h3,  .dp-print-body h4, .dp-print-body h5, .dp-print-body h6 {    page-break-after: avoid;  }  .dp-print-body a[href]:after {    content: \" (\" attr(href) \")\";    font-size: 0.85em;    color: #555;  }  .dp-print-body a[href^=\"#\"]:after,  .dp-print-body a[href^=\"javascript:\"]:after { content: \"\"; }  .dp-print-only #s2cdisclaimerarticle { display: block !important; }  .dp-print-only #s2cdisclaimer_toggle_plusarticle,  .dp-print-only #s2cdisclaimer_toggle_minusarticle { display: none !important; }  @page { margin: 0.75in; }}<\/style>","protected":false},"excerpt":{"rendered":"<p>\ud83d\udda8 Print\u23f1 3 min readThe Customer Acquisition Cost (CAC) measures how much a company spends to obtain new, additional customers. Oftentimes, this calculation is used with the customer lifetime value (LTV) metric, that also projects the customer&rsquo;s profitability to calculate the newly acquired customer&#8217;s value. It&#8217;s primarily used to measure a business&#8217; sales and marketing departments to figure out their profitability, profit margin and return on investment figures. How to Calculate CAC = Sales and [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,2],"tags":[],"class_list":["post-466","post","type-post","status-publish","format-standard","hentry","category-accounting-news","category-blog"],"_links":{"self":[{"href":"https:\/\/taos.service2client.biz\/index.php\/wp-json\/wp\/v2\/posts\/466","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/taos.service2client.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/taos.service2client.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/taos.service2client.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/taos.service2client.biz\/index.php\/wp-json\/wp\/v2\/comments?post=466"}],"version-history":[{"count":0,"href":"https:\/\/taos.service2client.biz\/index.php\/wp-json\/wp\/v2\/posts\/466\/revisions"}],"wp:attachment":[{"href":"https:\/\/taos.service2client.biz\/index.php\/wp-json\/wp\/v2\/media?parent=466"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/taos.service2client.biz\/index.php\/wp-json\/wp\/v2\/categories?post=466"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/taos.service2client.biz\/index.php\/wp-json\/wp\/v2\/tags?post=466"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}