Enter everything you spent to win new customers.
In the same period as the spend below.
CAC only means something next to what a customer is worth. Aim for a lifetime value of at least three times your CAC. Work yours out with the CLV calculator.
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Customer acquisition cost is the total amount spent on sales and marketing to win one new customer over a given period. It is calculated by dividing all acquisition-related spend by the number of new customers gained in that same timeframe.
CAC equals total sales and marketing spend divided by the number of new customers acquired in the same period. If you spent $15,500 across ads, salaries and software in a month and gained 100 new customers, your CAC is $15,500 divided by 100, which is $155 per customer.
Everything spent to win new customers: paid advertising, agency retainers, marketing and sales salaries, commissions, content and SEO costs, marketing software and CRM subscriptions, plus creative production. Exclude costs aimed at existing customers, such as retention email or loyalty rewards, since those belong to retention rather than acquisition.
There is no universal figure, because a good CAC depends entirely on what a customer is worth to you. The usable benchmark is the ratio: lifetime value should be around three times CAC. A $155 CAC is excellent if customers are worth $600 and ruinous if they are worth $120.
CPA, cost per acquisition, usually measures the cost of a specific action such as a lead, signup or trial start, and is often quoted per channel. CAC measures the cost of an actual paying customer across all of your sales and marketing spend. CPA is a campaign metric; CAC is a business metric.
Yes, for the number to be honest. Include the salaries of everyone working on acquisition, and apportion partial time where someone splits their week between acquisition and retention. Leaving salaries out is the most common way businesses understate CAC and convince themselves a channel is profitable when it is not.
Blended CAC divides all acquisition spend by all new customers, including those who arrived organically through word of mouth or search. Paid CAC counts only paid spend against customers attributable to it. Blended CAC flatters performance when organic is strong, so track both and never compare one against the other.
CAC is what you pay to get a customer; CLV is what that customer returns over the whole relationship. The relationship between the two determines whether growth is profitable. Below a 1 to 1 ratio you lose money on every customer acquired. Around 3 to 1 is generally considered healthy.
Monthly or quarterly for most businesses, and always over a period long enough to smooth out timing noise. Recalculate whenever you change channel mix, pricing or budget materially. Be careful with short windows, since spend and the customers it produces do not always land in the same week.
It does not change the arithmetic, but it changes what your CAC can afford to be. Retention raises lifetime value, which raises the CAC you can profitably pay, which lets you outbid competitors for the same customer. Two businesses with identical CAC can have completely different economics if one keeps its customers and the other does not.
Improve conversion rate so existing traffic produces more customers, cut spend on channels that do not pay back, and build acquisition sources that compound rather than rent, such as organic search and referrals. Referrals in particular tend to carry a far lower CAC than paid channels, because an existing customer does the acquiring for you.
Yes. No signup, no email and no limit on how many calculations you run. It is built by Mage Loyalty, a loyalty, referrals and store credit app for Shopify.
Mage is a loyalty, referral and store credit app built for Shopify. Reward repeat purchases, run VIP tiers, and give customers a reason to come back, without writing a line of code.
