CAC represents the total cost of marketing and sales spent to acquire a new customer over a given time period.
Formula: CAC = Total Cost of Marketing & Sales / Total New Customers Acquired
Example: If a company spent $100,000 on marketing (including $25,000 on paid social ads) and acquired 2,000 new customers in a month, their CAC would be $50 ($100,000 / 2,000 = $50).
