Short definition
CAC is the total cost — including ad spend, agency fees, sales time, and tools — required to acquire one paying customer.
In depth
CAC is the most important number in growth marketing because it sets the ceiling on what can be spent acquiring customers profitably. It must be compared to lifetime value (LTV); a healthy ratio is LTV-to-CAC of 3:1 or higher. CAC includes everything: media spend, agency retainer, content production, sales rep time, software licenses. Improving CAC means improving conversion at every stage of the funnel, not just lowering ad costs.
Example
A roofer with $40 lead cost and 30% close rate has CAC of $133. Average job value $9,000 means LTV-to-CAC is 67:1 — they should spend more on acquisition.