CAC (Customer Acquisition Cost) is the total cost of acquiring a new customer, including marketing, sales, and operational expenses. Calculate it by dividing total acquisition costs by number of new customers in a period. For example: spending $10,000 to acquire 100 customers means CAC is $100. A healthy business typically has CAC lower than customer lifetime value (LTV). Track CAC by channel to optimize spending. Include all costs: ads, salaries, software, overhead. Lower CAC through referrals, retention, and conversion optimization.