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.

Related Definitions

  • Property, Plant And Equipment - PP&E

    A company asset that is vital to business operations but cannot be easily liquidated. The value of property, plant and equipment is typically depreciated over the estimated life of the ...
    Read More »
  • Cost Of Acquisition

    A business sales term referring to the expense required to attain a customer or a sale. In setting a marketing and sales strategy, a company must decide what the maximum cost of ...
    Read More »
  • Marketing

    The activities of a company associated with buying and selling a product or service. It includes advertising, selling and delivering products to people. People who work in marketing ...
    Read More »
    • Capital Allocation

      A process of how businesses divide their financial resources and other sources of capital to different processes, people and projects. Overall, it is management's goal to optimize ...
      Read More »
    • Loss Leader Strategy

      A business strategy in which a business offers a product or service at a price that is not profitable for the sake of offering another product/service at a greater profit or to attract ...
      Read More »
    • Share Of Wallet - SOW

      A marketing term referring to the amount of the customer's total spending that a business captures in the products and services that it offers. Increasing the share of a customer's ...
      Read More »
    • Acquisition Financing

      The capital that is obtained for the purpose of buying another business. Acquisition financing allows the user to meet their current acquisition aspirations by providing immediate ...
      Read More »
    • Repurposing

      The use of something for a purpose other than its original intended used. Repurposing an item can be done by modifying it to fit a new use, or by using the item as is in a new way. The ...
      Read More »
    • Amalgamation

      The combination of one or more companies into a new entity. An amalgamation is distinct from a merger because neither of the combining companies survives as a legal entity. Rather, a ...
      Read More »

Articles Of Interest

Partner Links