UBS

Customer Acquisition Cost

What is Customer Acquisition Cost?

The fee is connected with persuading a customer to buy your product or service, which includes research, marketing, and advertising costs. Customer acquisition cost is an important business metric that should be analyzed with other data, particularly the customer’s worth to the organization and the consequent acquisition return on investment (ROI). Client value is used to determine how much of a company’s resources may be spent economically on a certain customer.

The reporting period is the first stage in estimating client acquisition costs. Customer acquisition costs are often calculated on a monthly, quarterly, or annual basis by businesses. Customer acquisition costs are calculated as follows: 

(Total of all sales and marketing expenses) / (Number of customers acquired)

The numerator and denominator numbers must be calculated using the same reporting period. For example, if a company’s overall sales and marketing expenses are $15,000 per month and it acquires 150 customers in that same month, the customer acquisition cost is $100.

Also, See: Product Led Growth

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