Calculate customer acquisition cost (CAC), what you spend on marketing and sales to win each new customer, and how many months it takes to earn that cost back.
What is customer acquisition cost?
Customer acquisition cost (CAC) is the average amount you spend to win one new customer. It includes all marketing and sales costs for a period, divided by the new customers gained in that period.
CAC = (marketing spend + sales costs) ÷ new customers
Payback period = CAC ÷ monthly gross profit per customer
Worked example
In one quarter you spend $10,000 on ads and content and $5,000 on sales, and win 300 new customers. CAC is $15,000 ÷ 300 = $50. If each customer brings in $14 of gross profit a month, it takes about 3.6 months to earn back the acquisition cost.
What to include
- Advertising and paid campaigns
- Marketing and sales salaries and commissions
- Marketing tools and software
- Agency, content and event costs
Using CAC well
- Compare CAC with customer lifetime value. A CLV:CAC ratio of about 3:1 is a common benchmark.
- Calculate CAC per channel to see which ads or campaigns work best.
- Watch the payback period: the shorter it is, the faster you can reinvest in growth.
Frequently asked questions
Should existing customers who buy again be counted?
No. CAC is about new customers only.
Why does CAC rise as I grow?
The easiest-to-reach customers often come first. Reaching new audiences usually costs more over time.
Related tools
Results are estimates for planning and education. They are not accounting, tax or legal advice. Check important figures with a qualified accountant.