Customer Acquisition Cost (CAC) can be calculated a few different ways based on the goal. For financial forecasting and valuation purposes, CAC as a profitability number should be all-inclusive. On the other hand, for the purposes of strategic and tactical marketing management, CAC might not include salaries and instead focus on discretionary spend.

Knowing what your CAC number really means is important to help make better sense of other numbers like Months to Recover CAC (MRC) and Lifetime Value (LTV).

LTV relies on your churn assumptions, which can often be overestimated if not careful. The resulting inflated projections can be detrimental to both your strategy and forecasting with investors.