About the Customer Acquisition Cost Calculator
Every new customer costs something to win. There is the advertising that first caught their attention, the content they read, the sales call that answered their questions, the free trial that let them try before they bought. Customer acquisition cost — CAC — adds all of that up and divides it by the number of customers it brought in, giving the average cost of winning one new customer.
On its own, CAC tells you how efficient your marketing and sales are. Set against what a customer is worth, it tells you whether growth is profitable at all. This customer acquisition cost calculator works out CAC from your marketing, sales and other acquisition spending and the number of new customers won in the same period. Add the customer lifetime value to see the LTV to CAC ratio, and the monthly gross profit per customer to see the payback period.
How to Use the Customer Acquisition Cost Calculator
Enter your marketing spend for the period: advertising, content, events, agency fees and marketing tools aimed at new customers.
Enter your sales spend: salaries, commission and tools for winning new business.
Enter any other acquisition costs, such as free trials, onboarding or referral rewards.
Enter the number of new customers won in the same period.
Optionally, enter the customer lifetime value and the monthly gross profit per customer.
How CAC Is Calculated
total spend = marketing + sales + other acquisition costs
CAC = total spend ÷ new customers
LTV : CAC = lifetime value ÷ CAC
payback = CAC ÷ monthly gross profit per customerStep-by-Step Example
Marketing spend of 12,000 and sales spend of 6,000 in a quarter, 200 new customers, a lifetime value of 288 and 8 of gross profit per customer per month.
Total spend: 12,000 + 6,000 = 18,000
CAC: 18,000 ÷ 200 = 90
LTV : CAC: 288 ÷ 90 = 3.2 : 1
Payback: 90 ÷ 8 = 11.3 monthsEach new customer costs 90 to win and returns 3.2 times that over their lifetime, earning back the acquisition cost in a little under a year.
What to Include, and What to Leave Out
Include the costs of attracting and converting new customers: paid advertising, search and social campaigns, content production, events and trade shows, marketing and sales salaries and commission, agency and freelancer fees, marketing and sales software, and incentives such as introductory discounts, free trials and referral rewards.
Leave out the costs of serving existing customers: customer support, account management and retention campaigns. Mixing them in makes CAC look higher than it really is and hides how efficiently new business is being won.
Match the periods. The spending and the new customers should come from the same period. If your sales cycle is long, spending in one quarter may produce customers in the next, so a longer window or a lag gives a fairer figure.
CAC by Channel
A single blended CAC across all channels is a useful headline, but it hides the detail that drives decisions. Paid search might win customers for 60, a trade show for 250 and referrals for 20. Working out CAC separately for each channel — its own spending divided by the customers it produced — shows where the next budget should go.
Be careful with attribution. Many customers see several channels before they buy, and the last click does not always deserve all the credit. Tracking how customers first heard of you, as well as what finally converted them, gives a more rounded picture.
Lowering CAC
Convert more of the visitors you already have. A better landing page or a simpler checkout lowers CAC without spending more on traffic.
Invest in channels that compound. Search visibility, useful content and a strong reputation keep bringing in customers long after the work is done.
Encourage referrals. Happy customers recommending you is usually the cheapest source of new ones.
Target better. Focusing on the customers most likely to buy, and to stay, lowers the cost of each one won and raises the value they bring.
CAC, Lifetime Value and Growth
CAC only means something next to lifetime value. A CAC of 500 is excellent if customers are worth 5,000 and ruinous if they are worth 300. An LTV to CAC ratio of about 3 to 1 is a common target: enough to cover the cost of winning the customer, the overheads of the business and a profit. The payback period matters too, because a business has to fund acquisition costs in cash until customers pay them back.
Reviewing CAC Regularly
Recalculate CAC each month or quarter, since costs and channels change.
CAC for a New Business
A new business has little history, so early CAC figures swing widely from month to month. Treat them as rough guides and refine them as more customers arrive.
Understanding Your Result
CAC is the average cost of winning one new customer.
Total spend shows the acquisition spending and customers counted.
Per customer by type splits CAC into marketing, sales and other costs.
LTV:CAC compares lifetime value with CAC, if entered.
Payback period is how many months it takes to recover CAC, if entered.
Worth knowing reminds you what to count.
When Should You Use This Calculator?
Reviewing marketing performance each month or quarter.
Comparing channels and campaigns.
Setting a budget for customer acquisition.
Preparing investor or board reports.
Checking whether growth is profitable.
Common Mistakes
Leaving out salaries and tools, which makes CAC look too low.
Including retention costs, which makes it look too high.
Mixing periods for spending and customers.
Judging CAC without lifetime value.
Relying only on last-click attribution.