Investopedia

Continue to Site »

Acquisition Cost

Filed Under » ,
Dictionary Says

Definition of 'Acquisition Cost'

1. The cost that a company recognizes on its books for property or equipment after adjusting for discounts, incentives, closing costs and other necessary expenditures, but before sales taxes.

2. The cost of a business to acquire a new customer. The company recognizes costs, including marketing and incentives, to introduce new customers to the company's products and services. The customer acquisition cost is calculated by dividing total acquisition costs by total new customers over a set period of time.

Also known as "cost of acquisition."

Investopedia Says

Investopedia explains 'Acquisition Cost'

1. Acquisition costs recognize more realistic costs on a company's financial statements. The acquisition cost of property and equipment recognizes any discounts or additional costs that the company will experience.

2. Customer acquisition costs are also important for companies to measure, as it aids in planning future capital allocations to things like marketing budgets and sales discounts. The company should also look at customer loyalty and whether the company will be able to retain customers easily.

Articles Of Interest

  1.

    Great Expectations: Forecasting Sales Growth

    Predicting sales growth can be something of a black art, unless you ask the right questions.

  2. Measuring Company Efficiency

    Three useful indicators for measuring a retail company's efficiency are its inventory turnaround times, its receivables and its collection period.

  3. Tips For Boosting Your Business

    Find out how butter up new clients, build up old files and better your bottom line.

  4. How rapidly can expanding sales reduce a firm's earnings?

    In order to operate and make money, a company must spend money. Revenue - the dollar amount of sales - can be seen on a company's income statement. From there, various expenses are deducted such ...

  5. What is property, plant and equipment, and what does it mean?

    Property, plant and equipment (PP&E) is a term that describes an account on the balance sheet. The PP&E account is a summation of all a company's purchases of property, manufacturing ...

  6. Warding Off Hostile Takeovers

    The purpose of this article is to provide a general overview of hostile corporate takeovers, while highlighting a general course of action against such activity. This article provides basic ...

  7. Dominion Diamond Goes Shopping - Should You?

    These are exciting times in diamond mining, is it time to buy?

  8. Verizon, AT&T And Vodafone – Here We Go Again

    A popular rumor gets new life with word that AT&T may help Verizon facilitate a buyout of Vodafone.

  9. Buffett And Goldman Sachs Do Sweetheart Deal

    Goldman Sachs announced March 26 that it will issue to Berkshire Hathaway in October the number of shares equal to Warren Buffett's profit from the 2008 warrants he got to purchase 43.5 million ...

  10. 5 ETFs Flaws You Shouldn't Overlook

    Despite their popularity, exchange traded funds have some drawbacks that investors should know about.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  2. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  3. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  4. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  5. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  6. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.
Trading Center