Acquisition Cost

Acquisition cost is the monetary requirement for acquiring another company.


What Is an Acquisition Cost?

Acquisition cost refers to the amount needed to take over another business. In some cases, it may also be referred to as the cost spent on acquiring new customers.

Acquisition costs provide the base amount paid for a company’s assets before sales tax. It applies to all expenses for acquiring a new customer or taking over another firm.

Fixed Assets Acquisition Costs

On top of buying the fixed assets, other costs incurred during acquisition are tied directly to the acquisition itself. For instance, legal fees must be included if legal assistance is needed to complete the purchase. Commissions may also apply with the purchase, such as those paid to a realtor when buying property. Other costs could be paid to a staffing company for placing employees or to a marketing firm to acquire new customers.

All costs associated with bringing a fixed asset to an operational state are also part of the acquisition cost. It includes shipping and receiving costs, installation, calibration and mounting costs.

Customer Acquisition Costs

Customer acquisition costs are the type of expenditure used to introduce a customer to the company’s services and products. The goal is for the customer to purchase goods and services from the company. This figure is calculated by dividing the total costs by the total number of new customers over a given period.

The customer acquisition cost is an important metric for planning future capital allocations. It also helps to design the marketing budget. Costs that come with customer acquisition include marketing and advertising costs, discounts, incentives, staff involved in the efforts, and other staff working for external advertising firms. Incentives may consist of free deals, free products with each purchase, gift cards, bill cards, free upgrades and more.

One example where customer acquisition is important is the wireless cellphone sector. Wireless firms often offer new customers free extended deals and increased data packages. They also offer discounts on new phones. The goal is to entice customers to pick them over the competition.

Acquisition Costs in the Crypto World

When it comes to the crypto world, there are acquisition costs involved with launching any project. For instance, when working on a blockchain project, a company has to offer competitive salaries to access the best talent. This comes under the talent acquisition cost.