Customer Acquisition Cost

Q: How do you calculate CAC?

CAC = (Total Sales + Marketing Costs) / Number of New Customers Acquired

The total cost of acquiring a new paying customer, including all marketing and sales expenses divided by the number of new customers acquired over a specific period.

1 min readLast updated Apr 2026

Reviewed by Golden Digital strategy team·Reviewed against paid acquisition reporting workflows for Shopify brands·Golden Digital D2C planning benchmark

Formula

CAC=(Total Sales + Marketing Costs)/Number of New Customers Acquired

Example: CAC = ($50,000 + $10,000) / 1,200 = $50 per customer

The total cost of acquiring a new paying customer, including all marketing and sales expenses divided by the number of new customers acquired over a specific period.

Use our free LTV Calculator to measure your LTV:CAC ratio and see if your acquisition spend is sustainable.

Why It Matters

CAC directly determines whether your business model is sustainable. If you're spending more to acquire customers than they're worth, you're essentially buying revenue at a loss. Understanding and optimizing CAC allows you to scale profitably, allocate marketing budget effectively, and make informed decisions about which channels deserve more investment.

Formula

CAC=(Total Sales + Marketing Costs)/Number of New Customers Acquired

Example: CAC = ($50,000 + $10,000) / 1,200 = $50 per customer

Benchmarks

A good CAC is Varies by industry. Top performers achieve LTV:CAC ratio of 3:1 or higher.

Good Performance

Varies by industry

Top Performers

LTV:CAC ratio of 3:1 or higher

Practical Example

Scenario

A D2C skincare brand spends $50,000 on Meta and Google ads in January, plus $10,000 on influencer partnerships. They acquire 1,200 new customers that month.

Calculation

CAC = ($50,000 + $10,000) / 1,200 = $50 per customer

Result

Each new customer costs $50 to acquire. If their average customer generates $150 in lifetime value, they have a healthy 3:1 LTV:CAC ratio and can scale confidently.

In-Depth Explanation

CAC is foundational for determining business sustainability—D2C brands must ensure their CAC is significantly lower than Customer Lifetime Value, with an ideal LTV:CAC ratio of 3:1 or higher.

Pro Tips

1Track CAC by channel separately—your Meta CAC might be $30 while TikTok is $80. This reveals where to shift budget.
2Include ALL acquisition costs: ad spend, agency fees, influencer payments, affiliate commissions, and even creative production costs.
3Monitor CAC trends monthly. Rising CAC often signals audience saturation or creative fatigue before other metrics show problems.
4Compare new customer CAC vs. returning customer acquisition cost to understand the true value of retention efforts.

Common Mistakes to Avoid

Only counting ad spend and ignoring agency fees, creative costs, and tool subscriptions—this understates true CAC by 20-40%.

Calculating CAC monthly without considering attribution windows. A customer who saw an ad in January but bought in February might be miscounted.

Obsessing over low CAC at the expense of customer quality. Cheap customers who never repurchase actually hurt profitability.

Frequently asked questions

There's no universal 'good' CAC—it depends entirely on your customer lifetime value. A $100 CAC is excellent if your LTV is $400, but terrible if LTV is $80. Focus on maintaining a 3:1 or better LTV:CAC ratio.

Focus on: improving ad creative and targeting, optimizing landing page conversion rates, leveraging organic channels (SEO, content, referrals), and retargeting warm audiences who convert at lower cost than cold traffic.

For blended CAC, yes—divide total marketing spend by all new customers. But also track paid CAC separately (ad spend / paid-attributed customers) to evaluate paid channel performance specifically.

Put it to work

Related Terms

Customer Lifetime ValueLTV

The total revenue a business expects to earn from a single customer over the entire duration of their relationship.

LTV:CAC Ratio

The ratio comparing customer lifetime value to customer acquisition cost. A 3:1 ratio is considered healthy.

Cost Per AcquisitionCPA

The cost of acquiring a specific action through a particular campaign or channel—such as a purchase, sign-up, or lead.

Gross Margin

The percentage of revenue remaining after subtracting the cost of goods sold (COGS).

Marketing Efficiency RatioMER

Total revenue divided by total marketing spend, providing a holistic view of marketing efficiency.

Free Calculator

See what a customer is worth, and what you can afford to pay for one.

Enter order value, how often customers buy and your margin. See lifetime value and, with your acquisition cost, how many months a new customer takes to pay it back. Calculator results are available without an account.

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