Cost Of Acquisition

AAA

DEFINITION of '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 acquisition will be, which effectively determines the highest amount the company is willing to spend to attain each customer.

BREAKING DOWN 'Cost Of Acquisition'

This cost is tied to marketing and sales campaigns because the more streamlined those campaigns become, the lower the customer cost of acquisition will be. Conversely, in a high-budget marketing and sales campaign, the acquisition cost may be relatively high depending on how many sales or customers the campaign draws in.

RELATED TERMS
  1. Bank Marketing Association - BMA

    The publishing arm of the American Bankers Association, a trade ...
  2. Return On Sales - ROS

    A ratio widely used to evaluate a company's operational efficiency. ...
  3. Cost-Benefit Analysis

    A process by which business decisions are analyzed. The benefits ...
  4. Variable Cost

    A corporate expense that varies with production output. Variable ...
  5. Marketing

    The activities of a company associated with buying and selling ...
  6. Acquisition Cost

    1. The cost that a company recognizes on its books for property ...
Related Articles
  1. Fundamental Analysis

    Measuring Company Efficiency

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

    5 Reasons Thoratec Corp. Keeps Impressing Investors

    Learn about Thoratec Corporation and its position in its industry. Understand five key factors why the company has impressed investors.
  3. Entrepreneurship

    Top 5 Startups That Emerged in Boston

    Learn why Boston is a hot market for startups, and familiarize yourself with a few of the top startups that have emerged from the city.
  4. Entrepreneurship

    How to Prep Your Business for a Sale

    Once you have a clean, stand-alone business with solid finances, it's time to put a price on it. Here are the steps needed to prepare for a sale.
  5. Stock Analysis

    This Is Why Instagram Is Winning Over Flickr

    Learn about Instagram's and Flickr's business models. Understand why Instagram has been winning over Flickr and why that trend is likely to continue.
  6. Professionals

    Career Advice: Management Consulting Vs. Investment Banking

    Compare the career opportunities available in management consulting and investment banking. Learn about salaries, skills needed and work-life balance.
  7. Stock Analysis

    Lockheed Martin to Buy Sikorsky. Is It the Right Move?

    Discover more information on the Lockheed Martin acquisition of Sikorsky, and learn why this move makes good strategic business sense for Lockheed.
  8. Stock Analysis

    4 Companies That Dominate Your Everyday Life

    Learn how companies such as Facebook, Google and Instagram dominate Americans' daily lives to the point their names have become verbs.
  9. Stock Analysis

    Comparing Coca-Cola and Pepsi's Business Models

    Understand more about the Coca-Cola company and the PepsiCo company. Learn about the key similarities and differences that make both companies successful.
  10. Stock Analysis

    YouTube Can Be A Real Threat for Netflix

    Understand the similarities and differences between YouTube and Netflix. Learn about three key reasons why YouTube can become a threat to Netflix.
RELATED FAQS
  1. 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 ... Read Full Answer >>
  2. How long does it take to execute an M&A deal?

    Even the simplest merger and acquisition (M&A) deals are challenging. It takes a lot for two previously independent enterprises ... Read Full Answer >>
  3. What are some common accretive transactions?

    The term "accretive" is most often used in reference to mergers and acquisitions (M&A). It refers to a transaction that ... Read Full Answer >>
  4. What are some ways to make a distribution channel more efficient?

    While there are many ways to make a distribution channel more efficient, the three high-level ways to increase the efficiency ... Read Full Answer >>
  5. How is a tender offer used by an individual, group or company seeking to purchase ...

    A tender offer is made directly to shareholders in a publicly traded company to gain enough shares to force a sale of the ... Read Full Answer >>
  6. How does a company record profits using the equity method?

    A company that invests in another company and has majority control of it would record profits using the equity method. This ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  2. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  3. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  4. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  5. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  6. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!