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Glossary

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC)

Sergey Zubkov

Updated: November 3, 2023

4 min read

Content

The amount spent for each newly-acquired mobile app user over a given time period.

What is cost of customer acquisition

Customer Acquisition Cost (CAC) for mobile apps refers to the cost that a business incurs to acquire a new user for their mobile application over a specific period of time. In other words, it is the amount of money spent to attract a user to download and install a mobile app on their device.

Whether you are just embarking on your journey or navigating quite a while to create a successful mobile app, the Customer Acquisition Cost (CAC) must be at the forefront of your mind.

How to calculate CAC

Сustomer acquisition cost formula  for mobile apps looks like: 

CAC = Total Cost of User Acquisition / Total Number of Acquired Users

In this formula, the “Total Cost of User Acquisition” refers to all the expenses associated with acquiring new users for your mobile app. This could include marketing and advertising costs, referral program rewards, or any other expenses that directly contribute to the acquisition of new users.

The “Total Number of Acquired Users” is the total number of new users who have downloaded and installed your mobile app within a specific period.

To get an accurate calculation of CAC, it’s important to consider all of the costs associated with acquiring new users, as well as the time period over which those users were acquired. By tracking CAC over time, you can identify trends and adjust your acquisition strategy to optimize your investment in acquiring new users.

CAC marketing with the Adapty platform

Within Adapty you can reach Cohort sections in the Analytics dashboard, and see the cohorts based on your app installs. With cohorts analytics, you can see the dynamics of how users are paying and unsubscribing from month to month as well as the revenue generated by each cohort in total. This data provides an ability to estimate how much money the cohort will bring in the future and whether it will be profitable. Comparing the acquisition cost for a particular period with the result of a long tail for the consequent cohort, you can see the associated return on investments and thus understand if the cost of the customer acquisition pays off.

Cost of customer acquisition (CAC) in marketing for mobile apps

The cost of acquiring a customer for mobile apps can include various expenses such as marketing and advertising costs, referral program rewards, development costs, and overhead expenses that contribute to acquiring new users. By calculating the CAC, businesses can determine the effectiveness of their user acquisition strategy and optimize their marketing efforts accordingly.

A high cost of customer acquisition means that a business is spending more money to acquire new users, which may not be sustainable in the long term. On the other hand, a low cost of acquisition per customer indicates that the business is effectively acquiring users at a lower cost, resulting in a higher return on investment (ROI) for the business.

The CAC is a critical metric in app marketing, allowing you to evaluate the effectiveness of not just your marketing spend, but also the other hidden costs such as development and overheads. It is the key to understanding the true cost of acquiring new users for your app.

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