CAC is the all-in price of a new customer. Shopify defines it as the total cost of acquiring a single customer, calculated by adding up acquisition costs for a period and dividing by first-time buyers in the same period; $500 of marketing spend for 10 new customers is a $50 CAC (Shopify).
CAC differs from CPA in scope. CPA counts a conversion, which may be a repeat order. CAC counts a new customer and includes everything spent to get them: ads, creator fees, commissions, free product, tools and people.
Commission UGC is attractive to brands because it turns part of CAC from a fixed cost into a variable one. Commission is only paid when a customer is won, so the CAC of the creator channel is known in advance.
Example. A brand spends $6,000 on ads in a month for 150 new customers, a $40 CAC. In the same month it pays creators $900 in per-video fees and $1,200 in commissions on codes that brought 70 new customers, a $30 CAC. Blended, the brand spent $8,100 for 220 customers, a $36.80 CAC. Example numbers, not a benchmark.
When brands use it. The pain this answers: “Why add to my CPA when I can just pay $200-300 a video?” Brands compare CAC by channel to decide where the next dollar goes, and they compare CAC with lifetime value to decide whether the business works at all. A commission rate is affordable when CAC through creators stays below what a customer is worth over time.
The creator’s view. A brand’s CAC tells a creator what a customer is worth to it, and so what commission is reasonable. If a brand’s paid CAC is $40 and it offers a creator $5 per order, there is room to ask for more.