Customer Acquisition Cost Calculator
Calculate CAC from total marketing spend and new customers acquired. Enter values for instant results with step-by-step formulas.
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer
Customer Acquisition Cost Calculator
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Formula: CAC = (Total Marketing Spend + Total Sales Spend) / New Customers Acquired
Worked example — CAC: $400 | LTV:CAC Ratio: 3.0:1 — Healthy
Formula
CAC = (Total Marketing Spend + Total Sales Spend) / New Customers Acquired
Add all marketing and sales expenses for a given period, then divide by the number of new customers acquired during that same period. The result is your average cost to acquire one new customer.
Worked Examples
Example 1: SaaS Company CAC
Problem:A SaaS company spends $50,000/month on marketing and $30,000/month on sales, acquiring 200 new customers. Their average customer LTV is $1,200.
Solution:Total Spend = $50,000 + $30,000 = $80,000 CAC = $80,000 / 200 = $400 LTV:CAC = $1,200 / $400 = 3.0:1
Result:CAC: $400 | LTV:CAC Ratio: 3.0:1 — Healthy
Example 2: E-commerce Business
Problem:An online store spends $15,000 on ads and $5,000 on email marketing, gaining 500 new customers.
Solution:Total Spend = $15,000 + $5,000 = $20,000 CAC = $20,000 / 500 = $40
Result:CAC: $40 per customer
Frequently Asked Questions
What is Customer Acquisition Cost (CAC)?
Customer Acquisition Cost (CAC) is the total cost of acquiring a new customer, including all marketing and sales expenses. It is calculated by dividing total acquisition spending by the number of new customers gained in a specific period. For example, if you spend $10,000 on marketing and sales in a month and acquire 100 new customers, your CAC is $100. CAC is a critical metric for understanding business unit economics and profitability.
What is a good LTV:CAC ratio?
A healthy LTV:CAC ratio is generally considered to be 3:1 or higher, meaning the lifetime value of a customer is at least three times the cost to acquire them. A ratio below 1:1 means you are losing money on each customer. A ratio of 1:1 to 3:1 suggests room for improvement. A ratio above 5:1 may indicate you are underinvesting in growth and could afford to spend more on customer acquisition to scale faster.
How do I reduce my CAC?
To reduce CAC: 1) Improve conversion rates through better landing pages and sales processes. 2) Focus on high-performing marketing channels and cut underperformers. 3) Leverage organic channels like SEO and content marketing for long-term cost reduction. 4) Implement referral programs to acquire customers at lower cost. 5) Optimize your sales funnel to reduce drop-off. 6) Use marketing automation to increase efficiency. 7) Target higher-intent audiences with better segmentation.
What costs should be included in CAC?
CAC should include all costs directly related to acquiring customers: advertising spend, marketing team salaries, sales team salaries and commissions, marketing software and tools, content creation costs, agency fees, event and sponsorship costs, and any other direct acquisition expenses. Some companies also include a portion of overhead, but the most common approach is to include only direct acquisition costs for cleaner analysis.
How is customer lifetime value (CLV) calculated?
Simple CLV = Average Purchase Value * Purchase Frequency * Customer Lifespan. For subscription models: CLV = Average Monthly Revenue per Customer / Monthly Churn Rate. For example, if a customer pays 50 dollars/month and your monthly churn is 5%, CLV = 50/0.05 = 1,000 dollars. CLV should be at least 3 times your customer acquisition cost.
How do I calculate customer acquisition cost (CAC)?
CAC = Total Sales and Marketing Expenses / Number of New Customers Acquired in that period. Include all related costs: advertising, salaries, tools, commissions, and overhead. CAC payback period = CAC / Monthly Gross Margin per Customer. A payback period under 12 months is generally healthy for SaaS businesses.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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