Acquisition Cost – The cost of gaining a new customer. Advertisers consider the amount of revenue potential from a potential customer over a life time to determine maximum acquisition cost.
This is a long-term perspective. A business looks at what it will cost to acquire a new customer and hold on to that customer over time. Things like advertising, product/service pricing and customer service are all part of acquisition cost.
Projected acquisition costs are usually based on historical data relating to the things mentioned above. This type of analysis can help a company determine its long-term budget expenses and potential revenue.
It can also help determine areas that may need improvement in order to retain customers long-term.