Customer Acquisition Cost (CAC) is a key business metric that represents the total cost of acquiring a new customer, including all marketing and sales expenses. It is calculated by dividing the total costs associated with acquisition by the total number of new customers acquired over a specific period. This metric is crucial for understanding the effectiveness of marketing strategies and determining the value that new customers bring to a company. A lower CAC indicates a more efficient acquisition strategy, while a higher CAC might suggest the need for optimization. CAC is often analyzed in conjunction with customer lifetime value (CLV) to assess the long-term financial health and sustainability of a business's customer acquisition strategies.