Clients are the essence of a freelancing business. Without them, freelancers won’t have any income and they can’t build up both their experience and portfolio. Because of this, significant efforts are given to find new clients. But how do you know if your client acquisition is truly profitable?
Client Acquisition Cost (CAC) is often overlooked by most freelancers when computing hourly rate and total income. Basically, CAC is the total time and money cost of getting new clients.
For example, you may automatically think that you’ve made a big profit after landing a new client. But, if you don’t know your CAC, how do you know for sure?
To attract clients, we often do a variety of tasks, such as market research, prep work, promoting your services, and other prospecting strategies. These tasks are not without cost. Each marketing campaign you do has a corresponding value that influences the outcome of your true income. This is your Client Acquisition Cost (CAC).
Here’s how to compute it:
Text by Louella Mata, Graphics from PandaDesk