Enter Expenses & Customers
Acquisition Overview
Customer Acquisition Cost, commonly known as CAC, is the total amount of money a business spends to acquire a single new customer. It includes all marketing campaigns, advertising budgets, sales team salaries, and software tools used to turn a prospect into a paying buyer.
The CAC Formula
To calculate your CAC, you need to add your total marketing expenses and total sales expenses over a specific period, and then divide that combined sum by the total number of new customers acquired during that exact same timeframe.
CAC = (Total Marketing Expenses + Total Sales Expenses) / New Customers Acquired
For example, if you spend 5000 dollars on marketing and 3000 dollars on sales, and you gain 100 new customers, your CAC is 80 dollars.
How to Use This Calculator
- Enter your total marketing expenses. This includes ad spend, content creation, agencies, and marketing tools.
- Enter your total sales expenses. This includes sales commissions, salaries, and CRM software.
- Input the total number of new customers you gained during the period you are measuring.
- Use the quick adjust slider to instantly visualize how improving your conversion volume lowers your CAC.
Why Measure Your CAC?
Knowing your CAC is crucial for determining business profitability. If it costs you 100 dollars to acquire a customer, but that customer only ever spends 50 dollars with your business, your current growth model is unsustainable. Comparing your CAC to your customer lifetime value (LTV) tells you if your marketing efforts are truly profitable.
How to Lower Your Customer Acquisition Cost
Lowering your CAC means you can acquire more customers for less money. You can achieve this by improving your website conversion rates, targeting a more specific audience to reduce wasted ad spend, or implementing a customer referral program. Retargeting past website visitors is also generally much cheaper than trying to acquire completely cold traffic.
Frequently Asked Questions
What is a good Customer Acquisition Cost?
A good CAC is entirely relative to what you are selling. If you sell a 5 dollar coffee, a 10 dollar CAC will ruin your business. If you sell a 10,000 dollar software package, a 500 dollar CAC is incredible. A healthy business typically aims for an LTV to CAC ratio of 3:1, meaning the customer brings in three times more revenue than they cost to acquire.
What is the difference between CPA and CAC?
Cost Per Acquisition (CPA) often measures the cost to acquire a lead, a free trial signup, or a specific action. CAC strictly measures the cost to acquire a fully paying customer.
Should I include salaries in my CAC calculation?
Yes. Fully loaded CAC includes the salaries of your marketing and sales staff. Excluding salaries gives you a basic marketing CAC, but including them provides a much more accurate picture of your actual business operations cost.