Acquisition Cost

No, it's not the $600 you paid for those red-bottom Louboutins. Instead, acquisition cost refers to the book value a company recognizes for property, plant, and equipment it has purchased, subtracting other benefits it got when making the purchase, like state tax waivers, "cheap money loans," and free coffee.

So that's acquisition cost as it applies to one business buying stuff meaningful enough to be tracked on the balance sheet. Acquisition cost can also refer to the cost of acquiring a customer. At Shmoop, we don't spend money on marketing, so we have zero costs, other than our own blood, sweat, and tears...mainly tears, in acquiring a customer. But match.com spends a fortune advertising everywhere, and they can do fancypants math, such that in a given year, if they spend $80 million dollars on marketing and get a million new customers, than each new customer costs them, give or take, $80.

The question then revolves around whether that acquisition cost was well spent, i.e., did the customer hang around paying $25 a month or more for at least four months, or did they only sign up for one month and then go away? And/or did they sign up for one month, go away, and then come back six months later after the divorce for a year?

Like the onerous task of finding the proper spouse, identifying whether or not acquisition costs were well spent or not is a moving target.