--- title: "What Is CAC? Customer Acquisition Cost Explained | RentAnOTT" description: "CAC is what a streaming service spends to win one new subscriber. See the formula, what to include and how it relates to LTV and payback." url: "https://www.rentanott.com/glossary/cac" markdown_url: "https://www.rentanott.com/glossary/cac.md" category: "Metrics" updated: "2026-10-05" --- # What is CAC? CAC (customer acquisition cost) is the average amount a service spends on marketing and sales to gain one new paying customer. It is total acquisition spending in a period divided by the number of new customers won in that period. ## How to calculate CAC Add up everything spent on acquiring customers in a month and divide by the new paying subscribers that month. Spending $20,000 to gain 800 subscribers gives a CAC of $25. - Paid advertising and promotion - Affiliate and influencer payments - Free trials: the cost of serving trial users who never pay - Discounts and promotional offers for the first period - Marketing salaries, agencies and tools ## Blended and paid CAC Blended CAC divides all spending by all new subscribers, including those who arrived through search, word of mouth or your existing audience. Paid CAC counts only the subscribers who came from paid channels and is always higher. Use paid CAC to judge a campaign and blended CAC to judge the business. ## CAC, LTV and payback CAC only means something next to what a subscriber is worth. A common target is a lifetime value at least three times CAC. Payback period, CAC divided by monthly margin per subscriber, shows how many months it takes to earn the spending back. Count trial users carefully. If only 40% of trials convert, the cost of one paying subscriber is the cost of one trial divided by 0.4. ## CAC on RentAnOTT The revenue calculator projects subscribers, lifetime value and the break-even month from your traffic, conversion, price and churn, which shows how much you can afford to spend on acquiring each subscriber. [Try the revenue calculator](https://www.rentanott.com/tools/ott-revenue-calculator). ## Related terms - [LTV](https://www.rentanott.com/glossary/ltv) — LTV (customer lifetime value) is the total revenue, or margin, a service expects to earn from one subscriber over the whole time they stay. It tells you how much you can afford to spend to acquire a customer. - [LTV:CAC ratio](https://www.rentanott.com/glossary/ltv-cac-ratio) — The LTV:CAC ratio is customer lifetime value divided by customer acquisition cost. It shows how many dollars a subscriber returns over their lifetime for each dollar spent winning them. - [Trial conversion rate](https://www.rentanott.com/glossary/trial-conversion-rate) — Trial conversion rate is the percentage of people who start a free trial and go on to make their first payment. It measures how well a trial turns interest into paying subscribers. - [Churn rate](https://www.rentanott.com/glossary/churn-rate) — Churn rate is the percentage of a streaming service's subscribers who cancel or fail to renew during a period, usually a month. It is the main measure of how well a subscription service keeps its customers. - [ARPU](https://www.rentanott.com/glossary/arpu) — ARPU (average revenue per user) is a service's total revenue in a period divided by the number of users in that period. It shows how much each user is worth on average, across subscriptions, advertising and one-time sales. - [Free trial](https://www.rentanott.com/glossary/free-trial) — A free trial is a limited period, commonly 7, 14 or 30 days, during which a new subscriber has full access to a streaming service before being charged. When it ends, the subscription starts automatically unless the viewer cancels. - [MRR](https://www.rentanott.com/glossary/mrr) — MRR (monthly recurring revenue) is the subscription income a service can expect every month from its active subscribers, with all plans normalized to a monthly amount. It excludes one-time sales and other irregular income. ## Further reading - [How to start a streaming service](https://www.rentanott.com/blogs/how-to-start-a-streaming-service) - [OTT subscription plans and tiers](https://www.rentanott.com/blogs/ott-subscription-plans) - [Pricing](https://www.rentanott.com/pricing) ## Frequently asked questions ### What does CAC stand for? CAC stands for customer acquisition cost. ### Why does CAC rise as a service grows? The first subscribers are the people already looking for you. Each further group is harder and more expensive to reach, so paid CAC tends to climb as a channel is used more heavily. ### How can a streaming service lower CAC? Build audiences you own, such as email lists and social channels; use free episodes and trailers as marketing; add referral rewards; and improve the share of trials that convert. All 163 terms: [Streaming and OTT glossary](https://www.rentanott.com/glossary). ## Book a demo Tell RentAnOTT what you are launching. The team walks through the platform and maps the path to go-live around your catalog, markets and revenue model. Book a demo: https://www.rentanott.com/contact ## More from RentAnOTT - [Home](https://www.rentanott.com/index.md) — What RentAnOTT is, what every plan includes, and how launch works - [Features](https://www.rentanott.com/features.md) — Every core feature and optional add-on - [Pricing](https://www.rentanott.com/pricing.md) — Platform tiers, apps, add-ons, usage rates and example bills in INR and USD - [Free tools](https://www.rentanott.com/tools.md) — OTT app builder and calculators for streaming revenue, bandwidth, bitrate and pricing - [Insights](https://www.rentanott.com/blogs.md) — All streaming business articles - [Glossary](https://www.rentanott.com/glossary.md) — Definitions of streaming and OTT terms - [Book a demo](https://www.rentanott.com/contact.md) — Talk to RentAnOTT about your launch Full site in one file: https://www.rentanott.com/llms-full.txt