Do you include rent allocation cost to your CAC calculation?

Hi Leen,

An interesting question - I am approaching your query from an abstract view point – in my current role we adopt a simplistic “identifiable cost” approach.

In my opinion answers to the following questions & rationale will facilitate your decision on inclusion/ exclusion of rent into CAC:

1) What business am I in? Does it require a dedicated customer facing/interaction space (e.g. retail outlets, car showrooms, newspaper subscription) which is different in ambience/ presentation from rest of the “office space”? Is the space allocated / rental cost significant?

Cost of a dedicated space for customer interaction should ideally be part of CAC in the case of retail business/ car showroom, not so in the case of a newspaper subscription business (for its corporate office & printing press).

2) Apply the “relevant costing approach” to further substantiate – is incurring the rent triggered by the customer acquisition process? Is the space absolutely essential to customer acquisition?

E.g. For a newspaper business
Rent of printing press facility and corporate office(s) is not part of CAC whilst rentals of distribution centres, new regional offices, new newspaper kiosks opened in malls/ cafes/ restaurants should be CAC.

Hope this helps.

1

I've always understood CAC to be inclusive of overhead so yes, I would include any rents associated with employing a S&M team.

1