Updated July 2026. This piece originally defined RAC around the existing customer base. The definition below is broader and sharper: RAC applies to every dollar of revenue, and the split by source is the point.
Everyone tracks CAC. Cost to acquire a new customer. Table stakes: if you don't know what it costs to bring in a logo, you can't make rational decisions about growth.
Almost nobody tracks the number that matters more.
Revenue Acquisition Cost is the total cost to acquire one dollar of revenue, expressed as a percentage: everything you spent to generate a period's revenue, divided by the revenue it produced. CAC counts customers and treats them as interchangeable. RAC follows the dollars, from every source: new logos, expansion, renewals.
You know your CAC. What's your RAC?
The Split Is the Point
A single blended RAC hides everything interesting. Split it by revenue source and the numbers are damning.
New-logo revenue carries the full load: marketing, sales development, the whole acquisition motion, the commission. Typical cost lands between 35 and 50 cents per dollar of revenue. Expansion revenue carries almost none of that. No ad spend, no cold outreach, no qualification, because the customer is qualified, the trust is built, and the data already exists. Low teens per dollar. Renewals, single digits.
Same dollar of revenue. The one from your existing base costs a third as much to acquire, or less. That's not a company quirk. It's structural, and it's true at almost every company that has never once measured it. The cheap-to-acquire revenue is the revenue nobody's paid to acquire.
The Commissions Run Backwards
Now hold that split next to your comp plan.
We pay the biggest commissions on the most expensive revenue and starve the cheapest.
New business, the 40-cent dollar, gets the highest rates, the accelerators, the gong. Expansion, the 14-cent dollar, gets a reduced rate when it gets a rate at all, because the deals are treated as incremental add-ons instead of orchestrated offers. And renewal revenue, the cheapest dollar in the building, is usually nobody's number.
This is question six wearing a spreadsheet. Sales is comped to chase strangers, nobody is comped to collect the base, and then leadership wonders why latent revenue stays latent. The comp plan isn't misaligned with the org chart. The comp plan built the org chart.
What Measuring It Buys You
Three things follow the moment RAC goes on the dashboard.
The efficiency case makes itself. Subtract RAC from your gross margin and you get what you actually keep per dollar of revenue. At typical numbers, expansion keeps half again more of every dollar than new business does, and pays its acquisition cost back faster. Which means expansion isn't a tradeoff against new-business investment. It's additive. The low RAC is the proof that you can fund the machinery, pay real commissions on expansion, and still come out far ahead.
The comp redesign writes itself. If a bigger expansion commission materially lifts how much of the ready pipeline actually gets collected, RAC improves even as the rate goes up. Optimize the cost per dollar, not the rate.
And expansion finally gets treated as something you acquire. Satisfied customers don't automatically buy more. They need a motion: milestones, signals, an owner, offers presented at the right moment. RAC is how that machine justifies its budget, because the machine is buying the cheapest dollars available anywhere in your business.
Track CAC. That's the price of entering the game.
Track RAC. That's how you know if you're winning it.
Where does your company stand? Take the Latent Revenue Test: the six questions, self-served. Ninety seconds, no email required.
Lincoln Murphy formally named and popularized Customer Success starting in 2010 and has spent 15 years connecting it to expansion revenue and commercial outcomes. Read The Premise.