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Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) is a calculation of the cost to acquire a new customer. Typically CAC is calculated as follows: 

CAC = Total sales and marketing expenses for a given period / Number of customers acquired in that period 

Once you know the CAC, you can calculate the payback period, which is the amount of time it takes to earn the money you spent acquiring a customer back. 

CAC Payback = Total sales and marketing expenses / (Net new MRR x gross margin)

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