Customer Acquisition Cost (CAC) Calculator

The Formula

Customer Acquisition Cost measures the average cost of acquiring one new paying customer, including all sales and marketing expenses. It is a fundamental unit economics metric for any business with a marketing budget.

Variable Definitions

How to Use This Calculator

1. 1

   Enter all sales and marketing spend for the period (including salaries).

2. 2

   Enter the number of new customers acquired in the same period.

3. 3

   Optionally add LTV for the LTV:CAC ratio and AOV + margin for payback period.

4. 4

   Compare your CAC to LTV and payback period to evaluate marketing efficiency.

5. 5

   Aim for LTV:CAC above 3:1 and payback period under 12 months.

Common Applications

• Measuring marketing efficiency by tracking how much it costs to acquire each new customer across all channels
• Evaluating whether ad spend is sustainable by comparing CACTotal cost of acquiring a new customer, including marketing and sales expenses. CAC = total acquisition costs ÷ new customers. against customer lifetime value using the LTVThe total revenue a business can expect from a single customer over their entire relationship. LTV > 3× CAC is considered healthy.:CACTotal cost of acquiring a new customer, including marketing and sales expenses. CAC = total acquisition costs ÷ new customers. ratio
• Determining how many months it takes to recoup the cost of acquiring a customer through gross profit margin
• Comparing acquisition costs across different marketing channels (paid search, social media, organic) to optimize budget allocation

Customer Acquisition Cost — total spend divided by new customers

Understanding the Concept

CACTotal cost of acquiring a new customer, including marketing and sales expenses. CAC = total acquisition costs ÷ new customers. is one of the most important metrics for any business with a marketing budget. A sustainable business must have an LTVThe total revenue a business can expect from a single customer over their entire relationship. LTV > 3× CAC is considered healthy.:CACTotal cost of acquiring a new customer, including marketing and sales expenses. CAC = total acquisition costs ÷ new customers. ratio above 3:1 — meaning each customer generates at least 3x what it cost to acquire them. The CACTotal cost of acquiring a new customer, including marketing and sales expenses. CAC = total acquisition costs ÷ new customers. payback period tells you how long until marketing investment is recovered. Venture-backed SaaS companies typically target payback periods of 12-18 months. E-commerce brands often need faster payback of 6-12 months. High CACTotal cost of acquiring a new customer, including marketing and sales expenses. CAC = total acquisition costs ÷ new customers. is sustainable if LTVThe total revenue a business can expect from a single customer over their entire relationship. LTV > 3× CAC is considered healthy. is proportionally high. Real-world example: a DTC brand spends $50,000 on ads, content, and salaries in a month and acquires 500 customers. The CACTotal cost of acquiring a new customer, including marketing and sales expenses. CAC = total acquisition costs ÷ new customers. is $100 per customer. If each customer has an LTVThe total revenue a business can expect from a single customer over their entire relationship. LTV > 3× CAC is considered healthy. of $400, the LTVThe total revenue a business can expect from a single customer over their entire relationship. LTV > 3× CAC is considered healthy.:CACTotal cost of acquiring a new customer, including marketing and sales expenses. CAC = total acquisition costs ÷ new customers. ratio is 4:1 — very healthy. If that same brand switches to higher-cost influencer campaigns and CACTotal cost of acquiring a new customer, including marketing and sales expenses. CAC = total acquisition costs ÷ new customers. rises to $200 while LTVThe total revenue a business can expect from a single customer over their entire relationship. LTV > 3× CAC is considered healthy. stays at $400, the ratio drops to 2:1 — still workable but with less margin for error. If they further scale and CACTotal cost of acquiring a new customer, including marketing and sales expenses. CAC = total acquisition costs ÷ new customers. hits $500 while LTVThe total revenue a business can expect from a single customer over their entire relationship. LTV > 3× CAC is considered healthy. remains $400, the ratio drops below 1:1, meaning every new customer destroys value. At that point the business must either find cheaper acquisition channels, increase prices, improve retention, or reduce spending.

Frequently Asked Questions

Sources & References