Customer Acquisition Cost Calculator

Calculate your Customer Acquisition Cost (CAC) to understand how much you're spending to acquire new customers and optimize your marketing ROI.

Calculate Your Customer Acquisition Cost Calculator

Include advertising, content, events, etc.

Include salaries, commissions, tools, etc.

Onboarding, implementation, etc.

Customer Acquisition Cost

Monthly CAC

$320

Cost to acquire each new customer

Total Acquisition Costs

$160,000

Annualized CAC

$3,840

For comparison with annual customer LTV

To evaluate if your CAC is healthy, compare it to your Customer Lifetime Value (LTV). A good LTV:CAC ratio is typically 3:1 or higher.

What is Customer Acquisition Cost?

Customer Acquisition Cost (CAC) is a metric that measures the average cost of gaining a new customer. It includes all marketing and sales expenses incurred to acquire customers over a specific period, divided by the number of new customers gained during that same period.

How to Calculate CAC

The basic formula for calculating CAC is:

CAC = Total Acquisition Costs ÷ Number of New Customers

Where Total Acquisition Costs typically include:

  • Marketing Expenses: Advertising, content creation, events, sponsorships, etc.
  • Sales Expenses: Sales team salaries, commissions, sales tools, CRM costs, etc.
  • Other Costs: Technical setup, onboarding, implementation teams, etc.

The Importance of CAC

  • Business Sustainability: Ensures your cost to acquire customers doesn't exceed their value.
  • Marketing Efficiency: Helps evaluate which marketing channels and campaigns are most cost-effective.
  • Investment Planning: Guides decisions on how much to invest in growth versus profitability.
  • Business Valuation: Investors closely examine CAC when valuing companies, particularly subscription businesses.

CAC Benchmarks and Evaluation

There's no universal "good" CAC figure, as it varies significantly by industry, business model, and stage of company. However, there are two primary ways to evaluate your CAC:

  1. LTV:CAC Ratio: Compare CAC to Customer Lifetime Value (LTV).
    • Ratio ≥ 3:1 is generally considered healthy
    • Ratio < 1:1 means you're losing money on each customer
    • Ratio > 5:1 might indicate underinvestment in growth
  2. CAC Payback Period: How long it takes to recover the cost of acquiring a customer.
    • For SaaS: Aim for 12 months or less
    • For e-commerce: Often measured in days or weeks
    • For enterprise B2B: May accept 18-24 months

Strategies to Improve CAC

  • Improve Conversion Rates: Optimize landing pages, checkout processes, and sales workflows.
  • Implement Customer Segmentation: Focus on acquiring high-value customer segments.
  • Leverage Organic Channels: Invest in SEO, content marketing, and organic social media.
  • Optimize Paid Advertising: Refine targeting, improve ad creative, and test different platforms.
  • Develop Referral Programs: Encourage existing customers to refer new ones at lower acquisition costs.
  • Streamline Sales Processes: Reduce time-to-close and improve sales efficiency.

Related Calculators

Average Fixed Cost Calculator

Calculate the average fixed cost of production

Cost of Doing Business Calculator

Calculate the total cost of running your business

Cost of Goods Sold Calculator

Calculate the direct costs of producing goods sold by a company

Customer Retention Rate Calculator

Calculate the percentage of customers who stay with your business

Frequently Asked Questions

You should include all marketing expenses directly related to acquiring new customers. Brand awareness campaigns that have long-term benefits may be partially allocated. Some companies calculate 'Fully Loaded CAC' (including all overhead) and 'Marketing CAC' (marketing expenses only) to get different perspectives on their acquisition efficiency.

For most businesses, calculating CAC quarterly provides a good balance between recency and having enough data to spot trends. Startups and companies with rapidly changing marketing strategies might benefit from monthly calculations. Just ensure your timeframe is long enough to account for your typical sales cycle length.

B2B companies typically have higher CAC than B2C due to longer sales cycles, more touchpoints, and higher-touch sales processes. B2B CAC can range from hundreds to thousands of dollars, while B2C CAC is often measured in tens of dollars. However, B2B customers usually have higher lifetime values, which can justify the higher acquisition costs.

Yes, calculating channel-specific CAC is highly valuable. By determining CAC for each marketing channel (social media, content marketing, paid search, etc.), you can identify your most cost-effective acquisition methods and optimize your marketing budget allocation accordingly.

CAC and LTV are complementary metrics that should be analyzed together. The LTV:CAC ratio is a critical indicator of business sustainability. If a customer's lifetime value doesn't significantly exceed the cost to acquire them, your business model may not be viable. Most successful businesses aim for an LTV at least 3 times higher than their CAC.

Share This Calculator

Found this calculator helpful? Share it with your friends and colleagues!