CAC
Also known as: Customer Acquisition Cost, Cost of Customer Acquisition
Customer Acquisition Cost — the total cost of acquiring a single customer, including sales, marketing, and onboarding expenses.
Full Definition
CAC is a key metric in the H-BMC Investor Economics block. It includes all costs associated with acquiring a customer: sales team compensation, marketing spend, conference presence, pilot support, and integration assistance. In healthcare, CAC tends to be high due to long sales cycles, enterprise procurement processes, and the evidence requirements of institutional buyers. CAC must be recovered through LTV within a reasonable payback period.
Example
A health IT company's annual sales team cost is $2M. They close 20 new health system customers per year. CAC = $2M / 20 = $100K per customer. With an LTV of $400K and a 4x LTV:CAC ratio, the model is viable but at the low end.