Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) is the fully-loaded cost of acquiring a new funded MCA merchant — including lead spend, sales rep cost, marketing infrastructure, and origination overhead — and a critical input to lifetime value analysis and unit-economics modeling.
Why This Matters
CAC differs from CPFD by including downstream sales and origination costs beyond direct marketing spend. A merchant funded for the first time at $2,500 CPFD might carry $3,800 CAC after allocating sales rep time, underwriting overhead, and CRM/dialer technology costs. CAC matters for portfolio economics: when paired with average lifetime value (LTV — total commissions earned per merchant relationship across initial deal plus renewals), the LTV:CAC ratio determines business model viability. Healthy MCA operations target LTV:CAC of 3:1 or better.
Frequently Asked Questions
Frequently Asked Questions
How is MCA CAC different from MCA CPFD?
CPFD captures only direct marketing/lead cost per funded deal. CAC adds sales rep cost, underwriting overhead, technology costs, and other downstream expenses. CAC is typically 1.3–2.0x CPFD depending on operational efficiency.
What's a healthy MCA LTV:CAC ratio?
3:1 is healthy, 5:1+ is exceptional. Below 2:1, the business struggles to fund growth. Above 3:1, the business has spare capacity for acquisition expansion or margin investment. Renewal rates dramatically affect LTV — a 50% renewal rate roughly doubles LTV vs. one-deal merchants.