Skip to main content

Customer Acquisition Cost Calculator (CAC)

Calculate how much it costs to acquire each new customer. Enter your marketing and sales costs to get instant CAC results and optimize your growth strategy.

∞
USD

This CAC (Customer Acquisition Cost) calculator helps you understand how much it costs to acquire each new customer. Understanding your CAC is crucial for sustainable business growth and profitability.

Table of Contents

What is CAC

Customer Acquisition Cost (CAC) is the total cost your business incurs to acquire a new customer. It's one of the most important metrics for any business, especially those focused on growth.

CAC includes:

  • Marketing costs (advertising, content, campaigns)
  • Sales costs (salaries, commissions, tools)
  • Related overhead directly tied to acquisition

How to Calculate CAC

The CAC formula is straightforward:

CAC = (Total Marketing Cost + Total Sales Cost) ÷ Number of New Customers

Practical Example

Suppose in one month:

  • Marketing Cost: $15,000 (ads, content, tools)
  • Sales Cost: $10,000 (team salaries, commissions)
  • New Customers: 50

Calculation:

  1. Total Acquisition Cost = $15,000 + $10,000 = $25,000
  2. CAC = $25,000 ÷ 50 = $500 per customer

Why CAC Matters

1. Profitability Assessment

If your CAC is higher than what a customer generates in profit, you're losing money on growth.

2. Growth Strategy

Understanding CAC helps you:

  • Decide which acquisition channels to scale
  • Set realistic growth targets
  • Allocate marketing budget effectively
  • Evaluate campaign performance

3. Investor Confidence

Investors look at CAC to assess business sustainability. A healthy CAC relative to LTV (Lifetime Value) indicates a scalable business model.

CAC vs LTV

The relationship between CAC and Customer Lifetime Value (LTV) is critical:

LTV:CAC Ratio

  • Less than 1:1: You're losing money on each customer
  • 1:1 to 3:1: Break-even to marginal profitability
  • 3:1 or higher: Healthy, sustainable growth
  • Higher than 5:1: You might be under-investing in growth

Example

  • CAC: $100
  • Average Customer Value: $400
  • LTV:CAC Ratio: 4:1 ✓ (Healthy)

How to Reduce CAC

1. Improve Conversion Rates

  • Optimize landing pages
  • Improve sales pitch and process
  • Remove friction from signup/purchase
  • A/B test everything

2. Better Targeting

  • Focus on high-value customer segments
  • Use lookalike audiences
  • Refine buyer personas
  • Eliminate low-performing channels

3. Leverage Referrals

  • Implement referral programs
  • Encourage word-of-mouth
  • Build community and advocates
  • Lower CAC through organic growth

4. Optimize Ad Spend

  • Focus on high-ROI channels
  • Improve ad relevance and quality scores
  • Test different ad formats
  • Reduce wasted spend

5. Content Marketing

  • Create valuable, SEO-optimized content
  • Build organic traffic
  • Establish thought leadership
  • Generate inbound leads

6. Sales Efficiency

  • Automate repetitive tasks
  • Improve sales training
  • Shorten sales cycles
  • Focus on qualified leads

CAC by Industry

Typical CAC ranges (varies significantly):

  • SaaS (B2B): $200-$500
  • SaaS (B2C): $50-$200
  • E-commerce: $10-$50
  • Travel: $7-$15
  • Real Estate: $200-$600
  • Financial Services: $100-$300

Note: These are rough benchmarks. Your CAC should be evaluated relative to your specific LTV and business model.

Common CAC Mistakes

1. Not Including All Costs

Many businesses underestimate CAC by excluding:

  • Software and tools
  • Team salaries and overhead
  • Agency and contractor fees
  • Content production costs

2. Wrong Time Period

Ensure you're matching costs and acquisitions from the same period. Some businesses have longer sales cycles where costs are incurred before conversions.

3. Ignoring Retention

High CAC can be acceptable if customer retention is strong. Always consider CAC alongside churn rate and LTV.

Frequently Asked Questions

What is CAC (Customer Acquisition Cost)?

CAC is the total cost your business spends to acquire a new customer. It includes all marketing and sales expenses divided by the number of new customers acquired in that period.

How do I calculate CAC?

CAC = (Total Marketing Cost + Total Sales Cost) ÷ Number of New Customers. For example, if you spend $10,000 on marketing and sales and acquire 100 customers, your CAC is $100.

What is a good CAC?

A good CAC depends on your Customer Lifetime Value (LTV). Generally, you want an LTV:CAC ratio of at least 3:1. This means the lifetime value of a customer should be at least 3 times your acquisition cost.

How can I reduce my CAC?

Focus on improving conversion rates, optimizing ad targeting, leveraging referrals and word-of-mouth, improving sales efficiency, and creating content that attracts organic traffic.

What costs should be included in CAC?

Include all marketing expenses (ads, content, tools, agency fees), sales team costs (salaries, commissions, software), and related overhead directly tied to customer acquisition.

CAC Calculator | Customer Acquisition Cost | Free Tool | Berry